Earnings call transcript: Hyliion Holdings misses Q2 2025 revenue forecast

Hyliion Holdings Corp reported its second-quarter 2025 earnings, revealing a slight miss on revenue forecasts while exceeding expectations in earnings per share (EPS). The company posted an EPS of -$0.08, better than the forecasted -$0.09, but reported revenue of $1.5 million, falling short of the anticipated $1.55 million. Following the announcement, Hyliion’s stock experienced a decline, with premarket trading showing a 10.5% drop. According to InvestingPro data, the company maintains a strong balance sheet with more cash than debt and a current ratio of 11.16x, though it’s currently burning through cash at a concerning rate.

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Key Takeaways

• Hyliion’s Q2 2025 EPS of -$0.08 outperformed expectations.
• Revenue fell short of forecasts, coming in at $1.5 million.
• The company reduced its full-year revenue forecast to $5-$10 million.
• Stock price fell by 10.5% in premarket trading following earnings release.
• New tax credit incentives are expected to boost future projects.

Company Performance

Hyliion Holdings demonstrated resilience in its Q2 2025 performance by narrowing its EPS loss compared to forecasts. However, the company faced challenges in meeting its revenue targets, reporting $1.5 million compared to the $1.55 million forecasted. This shortfall in revenue marks a critical point as the company continues to navigate its strategic initiatives and market conditions. The company’s efforts to innovate and streamline operations, such as resuming deliveries of Carnot power modules and transitioning Linear Electric Motor production in-house, are noteworthy steps toward long-term growth.

Financial Highlights

• Revenue: $1.5 million (below forecast of $1.55 million)
• Earnings per share: -$0.08 (above forecast of -$0.09)
• Gross Profit: $131,000
• Total Net Loss: $13.4 million (up from $10.9 million in 2024)
• Cash and Investments: $185.3 million at quarter-end

Earnings vs. Forecast

Hyliion Holdings reported an EPS of -$0.08, which was better than the forecasted -$0.09, representing an 11.11% positive surprise. However, the company missed its revenue forecast of $1.55 million, reporting $1.5 million, a 3.23% negative surprise. This mixed result highlights the company’s ongoing challenges in revenue generation while managing to control its EPS losses more effectively than anticipated.

Market Reaction

Following the earnings announcement, Hyliion’s stock saw a significant decline, with a 10.5% drop in premarket trading. The stock’s performance reflects investor concerns over the revenue miss and the company’s revised revenue guidance. The current stock price of $1.513 positions it closer to its 52-week low of $1.11, indicating bearish market sentiment.

Outlook & Guidance

Hyliion has adjusted its full-year 2025 revenue forecast to a range of $5-$10 million, down from the previous $10-$15 million. The company plans to deliver all 10 early adopter units by the end of 2025, with commercial deployments anticipated to begin in 2026. Hyliion is also preparing for a 2026 commercial launch, leveraging new tax credit incentives to boost future projects.

Executive Commentary

CEO Thomas Healy emphasized the company’s progress in overcoming technical challenges and highlighted the strategic importance of new tax credits: "We’ve tackled some of the toughest technical challenges in LEN production and regen depowdering and design." Healy also noted, "The introduction of a 30% tax credit... validates our belief that the Carnot power module represents a significant advancement in clean, efficient distributed power technologies."

Risks and Challenges

• Revenue generation remains a challenge, as evidenced by the recent miss.
• Market volatility could impact investor confidence and stock performance.
• Technical challenges in production and innovation may delay project timelines.
• Economic pressures and competition in the clean energy sector could affect growth.
• Dependence on tax credits and incentives introduces regulatory risks.

Q&A

During the earnings call, analysts focused on the implications of the new tax credit and the technical challenges faced by Hyliion. Discussions also covered deployment plans with the U.S. Navy and potential military contract opportunities, reflecting the company’s strategic focus on expanding its market presence.

Full transcript - Hyliion Holdings Corp (HYLN) Q2 2025:

Tiffany, Conference Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hialeahan Holdings Q2 twenty twenty five Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

I would now like to turn the call over to Greg Stanley, Chief Accounting Officer. Greg, please go ahead.

Greg Stanley, Chief Accounting Officer, Hialeah Holdings: Thank you, and good morning, everyone. Welcome to Hyalion Holdings second quarter twenty twenty five earnings conference call. On today’s call are Thomas Healy, our Chief Executive Officer and John Panzer, our Chief Financial Officer. A slide presentation accompanying this call is available on Hialion Investor Relations website at investors.hyion.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. For more information on both factors that may cause the company’s results to differ materially from such forward looking statements, please refer to 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 unless required by applicable law. With that, I will now turn the call over to Thomas.

Thomas Healy, Chief Executive Officer, Hialeah Holdings: Hello, and thank you for joining us for Hialeah’s second quarter twenty twenty five earnings call. I’m joined today by our CFO, John Panzer. We have a number of positive updates to share with you on today’s call, including the resumption of deliveries as we resolve the key engineering and manufacturing challenges we highlighted earlier in the year. I’d like to begin by highlighting a major development this quarter that we believe underscores the value proposition of our Carnot power module and will help drive customer adoption in the years ahead. As part of the newly enacted One Big Beautiful Bill Act, a 30% investment tax credit has been established for customers deploying linear generators or fuel cells.

This tax credit will apply to projects that begin construction in 2026 or later and will remain in effect for the next ten years. This credit will apply not only to the generator itself, but also to the supporting infrastructure required for its operation. We believe this credit is significant for both Hynion and our customers as it affirms the value that fuel agnostic linear generators like the Carnot power module offer in addressing the growing need for clean distributed power generation in The U. S. Since the passage of this legislation, customer interest has increased as the credit will help offset the upfront cost of adopting our new Carnot technology.

Now shifting to our product development and deployment progress. During the past quarter, we delivered our second early adopter unit to the U. S. Navy. In the coming weeks, we expect to complete assembly of two additional Carnot power modules.

The first will be used to complete UL certification of the Carnot system, which is an important milestone ahead of product commercialization. The second power module will be the third early adopter customer unit and the first one delivered to a commercial customer. The main takeaway here is that we believe we’ve overcome some of the key manufacturing challenges we were facing in the first half of this year, which will allow us to continue producing systems. On the manufacturing side, I’d like to provide an update on production of the linear electric motor or LEM. Last quarter, we shared that we began parallel production of certain LEM components at our Austin facility in response to quality issues and delays with our contract manufacturer.

Unfortunately, those issues persisted and we made the decision this quarter to fully transition LEMS production in house. I’m pleased to report that this transition is going well. We are now successfully assembling LEMS internally at a pace that gives us confidence in our ability to meet our ongoing production needs. Our plan is to continue scaling in house LEMS production capability to support larger volumes of Carnot systems in 2026. While we continue to believe that this is a component that can eventually be outsourced for greater production efficiency, our current focus is on quality and execution to minimize the risk of further delays to LEM supply.

We achieved another important technical milestone this quarter by confirming our ability to remove residual powder from the REGEN component of the CARNO core. The REGEN is a three d printed metal part featuring a complex mesh structure that is critical for achieving the Carnot system’s power output and efficiency. Last quarter, we mentioned the development of an enhanced powder removal method. This quarter, we’ve been able to confirm the effectiveness of this process. This has enabled us to upgrade the region with a more complex mesh design that we expect will address the performance shortfall caused by our earlier simplified design that we had implemented for easier powder removal.

With this improved design, we believe we now have a solution capable of achieving the power and efficiency levels we are targeting for the Carnot power module. Bench testing of the redesigned regen has yielded encouraging heat transfer and performance results. We are now in the process of printing the moments needed to upfit a full Carnot core to validate expected performance during full power operation. As a reminder, the regen is easily retrofitted into existing Carnot cores, allowing us to continue production and testing with earlier versions of the regen. With the progress we have achieved so far this year, we continue to expect that we will deliver all 10 early adopter units in 2025.

Based on our current development and build schedule, we now expect that additional Carnot unit deliveries beyond the early adopter units and full product commercialization will shift into 2026. This schedule recognizes the time we need to properly learn from early deployments, including validating system performance and incorporating customer feedback. Meanwhile, we continue to build an inventory of printed components for Carnot power modules we plan to deliver in 2026 for product commercialization and afterwards. I’d also like to provide an update on our ongoing work with the U. S.

Navy. We’ve been running the Navy Carno units through near daily testing and we continue to see strong system reliability of the production components. Importantly, the minor issues we’ve encountered have been primarily related to software optimization as we implement new features and from test equipment. Overall, the Carnot power module production hardware has been performing well in testing against the Navy’s specifications. On the commercial front, we’ve had many notable developments.

This past quarter, we were awarded a Phase II small business innovation research contract for up to $1,500,000 that furthers our research and development work with the U. S. Navy for shipboard and stationary applications. Specifically, this contract focuses on the development of software required to manage and synchronize cores in a multi megawatt Carnot system. We’re particularly excited about how our Navy partnership is progressing as near term plans are underway to install multiple Carnot cores on a prototype Navy vessel and to deploy full Carnot power modules at multiple testing sites.

I’m also proud to share that HYLEAN’s Carnot power module has been designated as an awardable technology by the U. S. Air Force and the Department of Defense’s Chief Digital and Artificial Intelligence Office under the Military Multi Fuel Initiative. Achieving awardable status positions the Carnot technology to support the Air Force’s need for power technologies that can support critical operations during fuel supply disruptions. We expect that this designation will be beneficial for Halyan as we seek other military applications for Carnot technology.

This quarter, we signed a strategic MOU with Al Qaraif Industries during the Saudi U. S. Investment Forum outlining a potential $1,000,000,000 opportunity to deploy and localize Karno power modules in Saudi Arabia. This MOU is part of the 600,000,000,000 in commercial deals announced during President Trump’s visit. It marks a major step toward international deployment with initial units expected in 2026.

This quarter, we also signed an LOI with MMR Group, a global leader in custom electrical solutions serving commercial, industrial and utility markets. MMR has over 5,000 employees and more than $6,000,000,000 in delivered projects. The LOI outlines plans for MMR to purchase three Carnot power modules totaling up to 600 kilowatts of stationary power with deployments expected to begin in the 2026. The previously mentioned MOU and LOI are nonbinding in nature and subject to the execution of definitive agreements. To wrap up, we are very encouraged by the momentum we’ve built so far in 2025.

We’ve tackled some of the toughest technical challenges in LEN production and regen depowdering and design. The introduction of a 30% tax credit through the One Big Beautiful Bill Act validates our belief that the Carnot power module represents a significant advancement in the development of clean, efficient distributed power technologies and will serve as a catalyst for faster commercial deployment across a broad range of applications. We remain committed to delivering all 10 early adopter units this year and look forward to commercializing the Carnot system and broadening deployments in 2026. With that, I will now turn the call over to John for the financial update.

John Panzer, Chief Financial Officer, Hialeah Holdings: Thank you, Thomas, and good morning, everyone. Starting with our twenty twenty five second quarter results, we recorded revenue of $1,500,000 from research and development services related to our contracts with the Office of Naval Research. Cost of sales was $1,400,000 resulting in gross profit of $131,000 In the 2024, we recorded no revenue or cost of sales. R and D services revenue reflects both the sale of Cardinal Coors and related components to the U. S.

Navy, the work we performed to test and validate these units and other development work. Operating expenses for the second quarter were $15,800,000 compared to $14,000,000 in the 2024. The increase was related to research and development costs, which were $10,100,000 compared to $8,300,000 in the 2024. This increase reflects a ramp up in R and D work and growth in the production of additive components. SG and A expenses were $6,000,000 down from $6,300,000 in 2024, due primarily to lower facilities, insurance and professional services expenses, partly offset by higher labor costs.

In the second quarter, we recorded a credit and exit and termination costs of $346,000 due to asset sale gains related to our former powertrain business. In the 2024, we recorded a gain of $556,000 in exit and termination costs also related to asset sales. We recorded $2,200,000 of interest income during the second quarter, which is down from $3,100,000 in the prior year quarter due to a lowered level of investments this year. Our total net loss in the second quarter was $13,400,000 up from $10,900,000 in the 2024, but down from the $17,300,000 we recorded in the first quarter of this year. Year to date, we recorded revenue of $2,000,000 all from R and D services and gross profit of $143,000 We recorded no revenue or gross profit in the 2024.

Year to date operating expenses were $35,500,000 compared to $33,000,000 in the first half of last year. The increase in expenses is related to higher R and D expenses this year, partly offset by lower SG and A and powertrain exit and termination expenses compared to the first two quarters of last year. Net loss year to date is $30,700,000 compared to $26,400,000 last year. Turning to our cash and investment position, we spent $13,500,000 during the second quarter, down from $20,900,000 in the first quarter of this year. The slowdown in cash use was partly due to lower capital spending, which totaled $4,300,000 in the second quarter this year compared to $7,300,000 in the first quarter.

Capital spending consists primarily of additive printing machines and related equipment and also includes facility investments to support printer operation. Asset sales through the 2025 were $800,000 compared to $3,500,000 in the 2024. We finished the second quarter with $185,300,000 of cash and short and long term investments on our balance sheet. Last quarter, we provided an updated forecast of cash spending for the year, noting that tariffs with the EU were expected to increase capital spending by 2,000,000 to $3,000,000 and that we plan to purchase additional used printers. Although EU tariffs are now expected to be 15%, we are maintaining our forecast for total expenditures of $65,000,000 this year as well as the expectation that our year end balance of cash and investments will be approximately $155,000,000 These forecasts continue to assume that we will be able to offset cash capital spending with around $10,000,000 of equipment financing if favorable terms are available.

Our previous forecast of $10 to $15,000,000 in revenue for 2025 included both R and D services and sales of 200 kilowatt KARNAL modules to commercial customers. As Thomas mentioned earlier, we now expect the commercialization will extend into 2026. We are therefore adjusting our 2025 revenue forecast down to $5,000,000 to $10,000,000 to account for this shift. Next, we continue to expect to see positive gross margin for R and D services for the year. Finally, we continue to expect that the capital we have on hand today will be sufficient to carry us through the commercialization of Carnot power module sales.

Now I’ll turn the call back over to Thomas.

Thomas Healy, Chief Executive Officer, Hialeah Holdings: Q2 was a strong quarter for Hyleon with progress on multiple fronts. Our U. S. Customers will now benefit from a 30% investment tax credit on future Carnot deployments and we’ve resumed system builds after achieving key technical milestones, including fully transitioning LEMS production in house and finalizing both our depowdering process and regen design. These steps, along with demonstrated reliability in Navy operations, strengthen our path toward commercialization.

Our focus now is on executing the early adopter program, producing and upgrading systems with the new regen, scaling manufacturing and preparing for a 2026 commercial launch. We look forward to updating you next quarter on new deployments, partnerships and technical advancements. With that, we’ll turn the call back over to the operator for Q and A.

Tiffany, Conference Operator: There are no operator assisted questions at this time. I will now turn the call back over to Greg Stanley.

Greg Stanley, Chief Accounting Officer, Hialeah Holdings: Thank you. These are the questions that have come in from shareholders. Thomas, can you share more on the 30% tax credit? And how does this compare to previous ITC credits? Absolutely.

So I can’t emphasize enough just the importance of this tax credit for both Hylion and for our customers.

Thomas Healy, Chief Executive Officer, Hialeah Holdings: First, it just showcases that Carno is viewed as a technology that can really assist with energy resiliency and security for our nation, which is why in the new Big Beautiful Bill Act there’s been a 30% tax credit applied to linear generators and to fuel cells like the Carno. And then as we compare this against previous ITC that we’ve talked about in years past, The previous ITC was planned to have things like fuel dependency. So it was only going to be applied to fuels like hydrogen or to technology that’s going to use fuels like hydrogen. It also had thresholds that customers needed to meet where it started at a 6% credit and could raise up to a 30 plus percent credit. This new structure is much more simple.

It’s a flat 30% credit. It doesn’t have any stipulations on what fuel can or cannot be used and it’s in place for the next ten years. So we ultimately see this as a big benefit for our customers as it’s going to assist with their ability to adopt the carno.

Greg Stanley, Chief Accounting Officer, Hialeah Holdings: On product development, you spoke about LEMS and depattering. Are there other large issues that need to be resolved prior to shipping?

Thomas Healy, Chief Executive Officer, Hialeah Holdings: Absolutely. So LEMS and regens were really the two large things on our radar that over the past couple of quarters we’ve been addressing. As we shared on today’s call, very pleased that LEMS production has been pulled in house. That’s going well. We’re producing units and that’s what’s really allowed us to resume production that we talked about on today’s call.

In terms of the regen, this past quarter we confirmed that our depowdered strategy works. And now what we’re undertaking is we did a redesign of the regen. We made the mesh more compact. We improved the performance of the part. We’ve done bench testing of this and we believe that it’s hitting the performance criteria that we need.

And now we’re in the process of manufacturing these components to be able to roll them into the Carnot core and do full power operation. So all in all, those two objectives or those two initiatives are going well. We’re pleased with the progress that’s been made. A big shout out to our team both from an engineering standpoint and from a production standpoint of the progress they made over this past quarter. Then to highlight as we go ahead here, we highlighted on today’s call, the goal of the remainder of the year is to get these 10 early adopter units out there into customers’ hands and into operation.

And we’re going to have continued learning and feedback from the customers as they’re operating these systems. And then we’ve talked about how we’ve shifted the commercialization into 2026. This really gives us the ability to roll in any of the feedback or learnings to continue to improve the product. So right now we’ve tackled the main ones that have been on our radar and we’ll continue to learn from these systems as we get more of them deployed.

Greg Stanley, Chief Accounting Officer, Hialeah Holdings: On the Navy contract, can you share more on how the Navy is planning to use the Carnot? And are you pursuing other military contracts as well?

Thomas Healy, Chief Executive Officer, Hialeah Holdings: So the engagement with the military initially started with a focus of the Carnot being the power plant behind autonomous unmanned vessels. And this is still the overarching goal and this is where it began. One exciting thing is the military recently released some videos showcasing the ship that we’re actually going to be going into. And so these units that we’re producing now for the Navy ultimately have two paths ahead of them. Some will be going into that unmanned vessel.

Others will be going into stationary applications at military bases to prove the performance of the technology. Now as we also highlighted, our relationship with the military is continuing to grow. This past quarter we received another SBIR Phase II award. We also received awardable criteria by the U. S.

Air Force, which this means that any branch of the government can now have a more streamlined process in order to acquire the Carnot technology for their application. So, we’re continuing to push on areas and opportunities of where the military can be using the Carnot and we hope to be able to share more as we go forward on other applications that we’ll be moving into.

Greg Stanley, Chief Accounting Officer, Hialeah Holdings: That addresses all the questions. I’ll turn the call back over to Thomas for closing remarks.

Thomas Healy, Chief Executive Officer, Hialeah Holdings: Thank you all for joining this quarter’s earnings call. One thing I would like to highlight is this morning we released a video on our social media that highlights some of the feedback we’ve received from industry leaders who have come out to our facility and actually been able to see the Carnot in performance and see some of those benefits that we’ve talked about. So I’d strongly encourage you to go watch that video and see what others are saying about this revolutionary technology. Thank you again for joining the call, and we look forward again to sharing more updates on our next earnings call.

Tiffany, Conference Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.

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