Earnings call transcript: Hyliion Holdings Q4 2024 reports revenue growth

Hyliion Holdings Corp (HYLN) reported its fourth-quarter 2024 earnings, revealing a revenue of $1.5 million, primarily from research and development services. The company’s earnings per share (EPS) fell short of expectations at -$0.08, compared to the forecasted -$0.07. Despite this, the stock saw a positive market reaction, with a 6.25% increase in post-earnings trading, closing at $1.84. According to InvestingPro data, the company maintains a WEAK overall financial health score of 1.68 out of 5, though it holds more cash than debt on its balance sheet. The company’s future outlook remains optimistic with significant developments in product innovation and market expansion.

Key Takeaways

• Revenue for Q4 2024 stood at $1.5 million, primarily from R&D services.
• EPS for Q4 2024 was -$0.08, slightly missing the forecast of -$0.07.
• Stock price increased by 6.25% in post-earnings trading.
• Launched first early adopter Carnot generator unit, with the U.S. Navy as a client.
• Strong market interest in EV charging, waste gas, oil and gas, and data centers.

Company Performance

Hyliion Holdings continues to make strides in its niche market, focusing on innovation in generator technology. The company reported a revenue of $1.5 million for Q4 2024, a significant achievement given the challenges in the current economic climate. The company is positioning itself as a leader in low-emission, fuel-agnostic generators, with the first unit set to be delivered to the U.S. Navy.

Financial Highlights

• Revenue: $1.5 million for Q4 2024.
• Operating Income: $100,000 for Q4 2024.
• Full Year Cash Position: $219.7 million.
• Cash Used in 2024: $79.6 million.

Earnings vs. Forecast

Hyliion reported an EPS of -$0.08, slightly below the forecasted -$0.07. The difference represents a minor miss, reflecting the company’s ongoing investment in product development and market expansion. Revenue matched the expectations at $1.5 million, indicating steady progress in its business operations.

Market Reaction

Despite the slight miss in EPS expectations, Hyliion’s stock price rose by 6.25% in post-earnings trading. This positive movement suggests investor confidence in the company’s strategic direction and future growth potential. InvestingPro data indicates the stock is currently trading below its Fair Value, with a beta of 2.08 suggesting higher volatility than the market. The stock remains below its 52-week high of $4.095 but has shown resilience in the face of challenging market conditions. For comprehensive analysis of HYLN’s valuation and market position, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Hyliion projects its 2025 revenue to be between $10 million and $15 million, with an expected year-end cash position of $160 million. The company plans to commercialize its products in the second half of 2025 and aims for breakeven gross margins by the end of 2026. Hyliion is also eyeing international expansion opportunities in the Middle East and Hong Kong.

Executive Commentary

Thomas Healy, CEO of Hyliion, emphasized the importance of 2025 as a pivotal year for the company. "2025 will be a pivotal year as we focus on executing successful early deployments," Healy stated. He also highlighted the potential in international markets, saying, "We see international markets as being extremely promising for this technology."

Risks and Challenges

• Supply Chain Disruptions: Potential delays in manufacturing and delivery.
• Market Competition: Intense competition from conventional and alternative energy solutions.
• Economic Uncertainty: Macroeconomic factors could impact investment and growth.
• Technological Challenges: Ensuring the reliability and efficiency of new technology.

Q&A

During the earnings call, analysts focused on the company’s manufacturing cost reduction strategies and supply chain challenges. Hyliion addressed questions regarding its business model for maintenance and service, highlighting its commitment to reducing costs and increasing operational efficiency.

Full transcript - Hyliion Holdings Corp (HYLN) Q4 2024:

Kate, Conference Operator: Thank you for standing by.

My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to the Hylian Holdings 4Q twenty twenty four Earnings Release. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. Thank you.

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

Greg Stanley, Chief Accounting Officer, Hylian Holdings: Thank you, and good morning, everyone. Welcome to Hylian Holdings’ fourth quarter twenty twenty four earnings conference call. On the call today are Thomas Healy, our Chief Executive Officer and John Panzer, our Chief Financial Officer. A slide presentation accompanies this conference call and is available on Hylion’s Investor Relations website at investors.hileon.com. Please note that during today’s call, we will make certain forward looking statements regarding the company’s business outlook.

Forward looking statements are predictions, projections and other statements about anticipated events that are based on current expectations and assumptions, 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 put undue reliance on forward looking statements, and we undertake no duty to update this information unless required by applicable law. Thank you.

I will now turn the call over to Thomas.

Thomas Healy, Chief Executive Officer, Hylian Holdings: Hello, and thank you for joining us for Hylian’s fourth quarter and full year twenty twenty four earnings call. Today, I am joined by our CFO, John Panzer. This is an exciting time for Hylian and we have a number of significant updates to share. Most notably, we are pleased to announce that we have delivered our first early adopter customer unit. While we initially aimed to complete this milestone late last year, it did shift into 2025 due primarily to a couple of challenges we faced that we’ll cover on today’s call.

We continue to make progress with generator testing and validation and customer interest in our generator technology is growing. We have executed contracts and nonbinding LOIs with customers for more than 100 Carnot units. We are also pleased to share that we have signed our first LOI in the data center sector to supply prime power on-site for data centers, an opportunity for up to an additional 70 megawatts or three fifty of our Karno foreshaft systems of deployments in the years ahead. On our last earnings call, we showcased the Karno foreshaft system. Now, we are pleased to present what the genset enclosure looks like as shown in the accompanying slide presentation.

One of the most impressive characteristics of the Karno generator is its compact footprint for a system designed to provide 200 kilowatts of power. On the front of the enclosure is the user interface that allows users to select operating modes, set power output levels, and enable load following functionality. Since the Karno generator is designed to be fuel agnostic, users can enable a learning mode where the generator detects the type of fuel or fuel mixture being used and adjusts accordingly. The system is also designed to seamlessly transition to new fuel sources during operation without requiring user input. The four shaft Carnot generator is positioned at the base of the enclosure with the balance of plant support system, such as radiators, fans, air handling, and controls, arranged above it.

The Carno generator is equipped with cellular connectivity, allowing it to continuously communicate with the cloud. This enables customers to monitor and control the generator remotely. The rear of the enclosure is where the interconnects for fuel and electricity are located. The enclosure offers customers the ability to have an above ground or below ground connection. The Carno generator provides DC power similar to a battery, which is ideal for applications like EV charging.

For AC power needs, an inverter is used to convert the output to 40 volts AC, which is then tied into a facility’s standard electrical system. Each generator will be configured to meet customer needs for the intended application. For initial deliveries, some features, functions, and performance characteristics will not be available at launch. We will be making further enhancements to the system as we continue with product testing and validation, field trials, and as we receive customer feedback. One added benefit is that, since we have cellular connection with the generator, many system enhancements can be delivered via over the air

Sean Mulligan, Analyst, Janney: software updates. Now, I’d like to provide an update on our plans for 2025.

Thomas Healy, Chief Executive Officer, Hylian Holdings: Now, I’d like to provide an update on our plans for 2025. As we shared last quarter, early adopter units are our first deployments with customers. Some units will initially be deployed at our facility for further testing and validation, including customer specific application criteria, while others will be deployed at their final locations. Our plan is to deliver 10 of these early adopter customer units through approximately the middle of this year, which will then be followed by additional deliveries later in the year. As I mentioned earlier, we encountered some challenges related to supply chain sourcing and part processing that impacted our initial customer deployment and set back our testing and validation timeline.

One of our primary production activities has been standing up a contract manufacturer for assembling the linear electric motor component of the Carnot generator. We produced the initial components in house after finalizing the motor’s design and developing prototype assembly processes for this part. Transferring our learnings to the contract manufacturer took longer than anticipated, but production is now underway and we are working on improving throughput. Additionally, while operating the generator, we identified traces of residual metal powder that were slowly being released within the system. The powder was traced to parts that weren’t sufficiently cleaned following printing.

Parts for initial generators have undergone additional cleaning and are being used as we work on further enhancements to facilitate improvements in performance and metal powder removal. Looking ahead, as we deliver early adopter customer units through approximately the middle of the year, we will also use the time to continue testing and improving the generator and validating operating parameters. This plan also leaves time in the schedule to address other unanticipated issues if they arise. Later in the year, we expect customer deployments to continue, including delivery of units associated with R and D services. By the end of the year, we plan to have produced a couple of dozen generators with the number and pace of deliveries to customers determined by learnings from earlier deployment and the ramp up of our production supply chain.

We anticipate commercializing the Carnot generator sometime in the second half of the year, at which point we may recognize revenue for the early adopter customer unit and begin recognizing revenue for ongoing generator system sales. Overall, we expect to generate revenues between $10,000,000 and $15,000,000 for the year from generator sales and R and D activities. This estimate includes the sale of early adopter customer units. In parallel, we are actively building our manufacturing capacity and strengthening our supply base to support higher production volumes in 2026. This includes taking delivery of new additive printing machines at our Austin facility, which will continue throughout the year.

I’d now like to shift to some exciting commercial updates. We continue to see increasing demand for the Karno generator and we are pleased to share that we have now secured customer contracts and LOIs for over 100 Karno units. This level of interest well exceeds our planned deployments for 2025 and establishes a strong foundation for 2026. These LOIs span a variety of market segments, including EV charging, waste gas applications, oil and gas, and now data centers. We are also deploying units with the U.

S. Navy and Office of Naval Research with a plan to have the Carno generator as the power system onboard marine vessels. This past quarter, I’m excited to share that we executed an LOI with one of the leading data center developers. The agreement plans for a deployment of two of our two megawatt systems that we unveiled last quarter and are now developing. Each two megawatt enclosure is expected to house 10 Karno units, accounting for 20 of the more than 100 units we currently have under LOIs.

This data center LOI also includes a multi year opportunity that targets up to 70 megawatts of Karno generator deployment in the two megawatt configuration. This opportunity equates to approximately three fifty of our four shaft Karno units. We are working closely with this customer as we develop the two megawatt system and plan the first deployment in 2026. The Carnot generator’s high efficiency, low maintenance requirements, low emissions, and noise levels are critical needs for data center customers. The compact two megawatt configuration and fuel agnostic capability are added benefits in data center applications where space constraints and redundancy are key considerations.

We are excited to have a strong launch partner for the two megawatt product and firmly believe the Carno generator is a strong solution for powering data centers in the future. Late last year, we were awarded a $6,000,000 Department of Energy methane emissions reduction grant to support the deployment of up to two megawatts of Karnogenerators with a goal of reducing methane emissions in the oil and gas sector. We are excited to be working with Electrogen as the customer for these units and the facilitator of the deployments. Finally, we recently signed an LOI with Al Khoriev for the deployment of up to 12 Carno generators in Saudi Arabia. Al Khoriev is a leading provider in the generator market and a key player in the agricultural sector.

Initial deployments will focus on powering agricultural farms offering higher efficiency with lower emissions and maintenance requirements. The customer LOIs that we’ve discussed are non binding letters of intent and are subject to performance criteria and execution of binding agreements with customers. Similarly, the data center opportunity we discussed is contingent on successful performance and early deployment of the Karno generator. Shifting now to some further updates on our manufacturing growth. Scaling our manufacturing capacity remains a priority and additive manufacturing advancements play a key role in this effort.

Last quarter, we took delivery of our first Calibrium additive M Line printer manufactured by GE Aerospace. We are proud to be the first customer outside of GE to receive one of these machines in The U. S. This next generation additive manufacturing system significantly enhances our production capabilities, allowing us to print two to four times as many parts simultaneously compared to our existing machines. We have additional M Line printers on order, which we will be taking delivery of throughout 2025 to further scale our production capacity.

Lastly, I am pleased to share that we have begun recognizing revenue for R and D services related to the Karnogenerator in the fourth quarter of twenty twenty four, totaling $1,500,000 This revenue is associated with the development work under our contracts with the U. S. Office of Naval Research. We closed out 2024 with $220,000,000 in capital and as John will cover in more detail, we anticipate cash use of approximately $60,000,000 for 2025. This positions us with a strong balance sheet that will sustain us through the commercial launch of the Karnogenerator product.

Now, I will turn the call over to John for our financial update.

John Panzer, Chief Financial Officer, Hylian Holdings: Thank you, Thomas, and good morning, everyone. Starting with twenty twenty four fourth quarter results, we recorded revenue of $1,500,000 for research and development services related to our previously announced contracts with the Office of Naval Research. Cost of sales was $1,400,000 resulting in operating income of $100,000 In the fourth quarter of twenty twenty three, we recorded no revenue along with cost of sales and a gross loss of $41,000 Operating expenses for the fourth quarter were $17,200,000 compared to $32,600,000 in the fourth quarter of twenty twenty three. This decrease in expenses was driven by lower powertrain exit and termination costs, which were $61,000 in 2024 and $11,500,000 in 2023 as well as $6,500,000 of lower SG and A expenses, partly offset by $2,500,000 of higher R and D spending in 2024. Included in the $61,000 of powertrain exit and termination expenses during the fourth quarter was a $900,000 write down of assets of the discontinued powertrain business that are recorded as assets held for sale on our balance sheet.

This adjustment was mostly gains from the sale of other powertrain assets during the quarter. Our total net loss for the fourth quarter was $14,400,000 down from $29,100,000 in the fourth quarter of twenty twenty three. Full year operating expenses totaled $64,400,000 compared to $136,300,000 in 2023. Expenses in 2024 include $3,000,000 of Powertrain exit and termination costs net of asset sale gains compared to $11,500,000 in 2023. As we close 2024, the wind down of Powertrain is largely complete except for the ongoing sale of assets, which we expect to continue into 2025.

Also to close out the year, we repurchased 10,600,000.0 shares for an aggregate cost of $14,000,000 or 1.33 per share in 2024. We suspended our repurchase program in early May and do not expect to execute upon further repurchases, but may resume repurchasing activity at a later day if and is deemed appropriate. Turning to our cash and investment position. We spent $17,800,000 during the fourth quarter of twenty twenty four, net of receipts from asset sales and interest income. For the full year, we used $79,600,000 of cash, including previously restricted cash and finished the year with $219,700,000 of cash and investments on our balance sheet.

Breaking down uses of cash and investments for the full year, spending on core Karnal development activities totaled $41,500,000 net of interest income. Capital investments of $16,500,000 were directed mostly towards the purchase of additive printing machines and related equipment. As noted earlier, we spent $14,000,000 on share repurchases. Finally, we spent $13,000,000 on powertrain shutdown activities, which was partially offset by $5,400,000 of cash generated from powertrain asset sales. Turning to 2025, as Thomas mentioned earlier, we expect to generate between $10,000,000 and $15,000,000 in revenue, including both R and D services and sales of 200 kilowatt systems to customers.

Implicit in this assumption is our expectation of commercializing the Carnot generator in the second half of the year when we would also expect to recognize revenue from customer early adopter units. The recognition of payments as revenue will be subject to the terms of sale and the actual timing of Carnot generator commercialization. These terms include certification and permitting of the generator as well as achievement of operating performance criteria. Our reported gross margin for R and D services in 2025 is expected to be positive. We may also report positive gross margin for Carnot product sales depending on the timing of commercialization due

Kate, Conference Operator: to

John Panzer, Chief Financial Officer, Hylian Holdings: the current expensing of purchased components during the R and D phase of development. We continue to expect that we will quickly drive down production cost as we scale manufacturing volume and as we roll out the two megawatt Karno generating system. Therefore, our current outlook for achieving breakeven gross margins on a cash basis is near the end of twenty twenty six. We expect that capital expenditures for 2025 will be approximately $25,000,000 or $10,000,000 higher than 2024 as we continue to take delivery of new additive printing machines and other assets needed to ramp up Karnogenerator production. We plan to offset that increase with around $10,000,000 of equipment financing.

With these assumptions, our total cash outlays for 2025 net of equipment financing are expected to be similar to 2024. As a reminder, we spent $58,000,000 in 2024 for Karno generator development and capital expenditures, net of interest income. We expect to end 2025 with around $160,000,000 of cash and investments on our balance sheet. Finally, we continue to expect that the capital we have on hand today will be sufficient for the foreseeable future, including commercialization of the Karnogenerator sales. Now I’ll turn the call back over to Thomas.

Thomas Healy, Chief Executive Officer, Hylian Holdings: The past few months have been an exciting time at Hylian, marked by the official launch of our early adopter customer units program. We are encouraged by the strong and growing interest from customers and are excited to have secured a key partner for deploying our initial units in the data center space. Looking ahead, 2025 will be a pivotal year as we focus on executing successful early deployments, refining our technology and scaling manufacturing in preparation for 2026. We look forward to sharing further updates on additional deployments of early adopter units and the progress of the program on our next earnings call. With that, we’ll now turn the call back over to the operator for Q and A.

Kate, Conference Operator: It appears that there are no questions. I’ll hand over the call to Thelma. Please go ahead.

Thomas Healy, Chief Executive Officer, Hylian Holdings: Thank you. So we had a couple of questions that came in prior to the call. Greg will read the first one for us.

Greg Stanley, Chief Accounting Officer, Hylian Holdings: Can you tell us more about this first early adopter you’re going to and who is it going to and where is it located?

Thomas Healy, Chief Executive Officer, Hylian Holdings: Absolutely. So this first early adopter unit is actually going to the U. S. Navy. As you may recall, last quarter, we had announced that, we extended our Navy contract for another $16,000,000 So we’ve been working with the Navy for multiple years now and it got extended and then this first unit is going to the Navy.

For a little bit of background, the long term goal of our relationship with the Navy is to use the Carnot generator both in military vessels as well as in stationary applications. Actually pretty exciting, we just recently received first photos of the ship that we’ll actually be putting the Carnot generator into. It’s being built presently. So, so a great opportunity here. That initial unit will be staying in Ohio initially for further testing, validation, going through test protocols that the Navy has outlined.

And then from there, we’ll be producing further units, and then it will be going into both ship and stationary applications.

Kate, Conference Operator: Our question comes from the line of Sean Mulligan with Janney. Please go ahead.

Sean Mulligan, Analyst, Janney: Hey, Thomas. Good morning. Good morning. I think in the past, you’ve made some comments about Carnot’s, I guess, the ability for Carnot to compete against fuel cells, hydrogen fuel cells. And we’ve seen, you know, Bloom announced kind of larger deals in the data center space.

So I was just curious if you could remind us, like, how Carnot fits in the competitive landscape against fuel cells and then also, what we’re seeing out of some of these, kind of larger prime power nat gas gensets that are being announced in data centers also? That’s my first question.

Thomas Healy, Chief Executive Officer, Hylian Holdings: Absolutely. So I think you’re touching on the threat of, data centers we’re seeing this shift to make your own power, right? And in the past, it’s been tap into the grid and just have backup on-site power supply. Now it’s moving to make your own power, prime power application, which is extremely exciting for us because that’s where the Karno generator really shines. Now, to your point, we have seen companies like Bloom have made announcements, that they’re working with data centers.

I think recently they announced up to a gigawatt of deployments with one customer. So, what’s exciting for us is we see that we bring forward those alternative new energy benefits like the low emissions aspect, but also bring forward a lot more as well. So, very compact footprint with the Karnogenerator, which is critical for the data center space, even more compact than conventional natural gas or diesel engines that we’d maybe be competing with as well. And then we have the added benefits of the fuel flexibility, the ultra low maintenance, and then, as I mentioned before, the low emissions. So, when you tie all those together, we’re seeing a lot of interest coming forward from the data center space, which is highlighted by this LOI that we announced on today’s call, which is we’ve established a partner to be the first data center customer to deploy with that two megawatt system.

And then in that same LOI, we’ve outlined a multiyear opportunity that could get to up to 70 megawatts of deployed Karno generators.

Sean Mulligan, Analyst, Janney: Okay. Great. Is there a way to think about kind of pricing for Karno versus some of the traditional, nat gas gensets in the data center space or like what maybe where the crossover happens where it might be more beneficial to have a car now than the nat gas genset?

Thomas Healy, Chief Executive Officer, Hylian Holdings: Yes. So just to put some numbers to it. So a conventional nat gas engine could be that’s for prime power could be between 1,000 to 1,500 per kilowatt. Then when you look at fuel cells, we’re seeing those are usually around 3,000 to 3,500 per kilowatt. What we’ve said is, we’re somewhere kind of in between in the middle of the two of those on our pricing.

So, we are at a premium to a conventional engine, but less than the fuel cell players. And in terms of the ROI though, I think that’s where we see where we shine and frankly what customers really care about, right? They’re less worried about the upfront capital cost, more about is this going to be economical in the long run. And so, since we’re able to provide a superior efficiency compared to a conventional natural gas engine as well as we expect to have lower maintenance in addition to that. That drives that the ROI usually looks pretty compelling, especially for some of these programs which are looking at like ten plus years, fifteen plus years where they would be having these assets deployed.

Sean Mulligan, Analyst, Janney: Okay. Thank you. And just kind of to stay on that lot of thought, you mentioned that the new GEV printer prints like a multiple of what you’re using currently. I mean, the pathway to drive down your costs, can you talk about the visibility you have there in terms of the additive printing, just the the scale as you scale up and as you move to new printers, one, like, how can that impact your cost? And then two, the ability to ramp quickly.

Like, so you mentioned 70 megawatts, potentially with that data center customer. I mean, how quickly can you order printers and get them operable?

Thomas Healy, Chief Executive Officer, Hylian Holdings: Yes. So, a couple of layers there. So in terms I’ll answer the last part first. So we already have more of these M line printers on order, throughout 2025, which will help us with scaling capacity for 2026. And then, the best way to think about it is probably in that six to twelve months as to from when you order to when you’d be getting additional assets in for more printing capacity.

Obviously, the more visibility we can give to GE, our supplier on that, the better off we are on lead times. Now, in terms of cost down, I’d break it into two different buckets. So the first is what you touched on, which is how fast can these printers produce units. So, the great thing with this M line is compared to past printer technology that we are still operating and it’s still great, but the M line can now print anywhere from two to four times as many parts at once as compared to the past generations of technology. So, that allows us to increase throughput.

But then the other nice thing is we already have a roadmap from GE of how that same printer, that M line, will be able to be improved and modified over time to continue to increase its throughput. So, we see that as a great platform for scaling up manufacturing for us because not only is it faster today, but then it has capabilities as we go forward. The second aspect of cost down though is just working with our supply base. And I would actually say that is probably where the greater focus is presently on our end of right now we’ve been buying components at kind of that initial R and D sort of cost levels. We need to move into having agreements with our suppliers, volume commitments, driving costs down.

And I actually think that’s where we’re going to see more of our cost savings coming from than the printer side just because we’re actually already in an okay position on printer throughput.

Sean Mulligan, Analyst, Janney: Okay, great. I’ll turn it back and if there’s not any more questions, I have a couple more.

Thomas Healy, Chief Executive Officer, Hylian Holdings: Sure. So we’ve got another question that came in beforehand.

Greg Stanley, Chief Accounting Officer, Hylian Holdings: You announced an LOI with Alkuryev. Can you share more about The Middle East opportunity? And will this be your first international deployment?

Thomas Healy, Chief Executive Officer, Hylian Holdings: Yes. So, we’re excited to have announced this. Alkuryeff is a leading provider of generators in The Middle East as well as a dominant player in the agricultural space. And so, these initial gensets will be being used in farm applications as well as other applications to provide prime power. Now, what’s exciting about this is, I recently just did a trip over to The Middle East and what was very different compared to The US is most facilities already have diesel engines, generators, connected to them.

And then in some instances, we heard a story of a warehouse where they were operating the entire facility off of diesel engines for ten years before that customer was able to get a grid interconnect. And so, that’s also very different. And so, the region is already used to using engines, using generators. And so, as we think about deploying Carnot generators there, you’re kind of bringing forward this modular power plant, the performance levels of a power plant but doing it on a small scale, and being able to use fuels like diesel or future fuels that the region is looking to move to like LPG or, and so that allows us to not only give them a solution that has lower operating costs, lower maintenance, but also has this fuel flexibility to meet the goals of the region. So, it’s something we’re excited about.

In addition to that, we also have announced LOI with Jardine, which would be for Hong Kong. So, we see international markets as being extremely promising for this technology. And then we’ll hand the call back over to Sean. I think you said you had some additional questions.

Sean Mulligan, Analyst, Janney: You all operating and maintaining the Karnoz, is there some type of service contract there? I was curious because, like Solaris signed a prime power deal recently where they formed a JV with a data center customer and they’re kind of capturing economics more on the Power Gen side. So just, I guess, thoughts about the business model moving forward with data centers, is it just for sales or is there some other kind of revenue stream that we should think about there?

Thomas Healy, Chief Executive Officer, Hylian Holdings: Yes. So in the beginning, it’s going to be us maintaining these, generators that are out in the field. Long term, though, we would want to partner with others who already are established in that space and have them take on the maintenance and or some of the end customers that we’re working with have expressed interest that they would potentially want to take on the maintenance as well. So, in the short term, it will be us doing that, but long term, we’d want to work with others to take on that part of the business as opposed to us having to set up brick and mortar facilities all across The U. S.

Or globally as well.

Sean Mulligan, Analyst, Janney: Okay. And then just confidence in terms of you mentioned some supply chain issues, ramping up the contract manufacturer and then the metal powder issue, just confidence that you’ve kind of worked through those. How long did you have that early adopter system, like, operating at your facilities and working through issues before they go out into the field? Just any kind of thought process there would be great.

Thomas Healy, Chief Executive Officer, Hylian Holdings: Yes, absolutely. So maybe just to add color to both of the challenges that we faced this past quarter. So on the linear electric motor, just for clarity for anyone on the call, so this is the coils, the magnets in the center of the Carnot generator that actually produce electricity. Now, this is a Hylian designed Hylian’s IP solution. But and actually, the initial generators that we made, we used components that we produced in house for the linear electric motor.

We decided to shift that process to a contract manufacturer, And unfortunately, that process just took longer than anticipated, and there were some things we needed to work through. And so that’s what shifted us in not getting initial deliveries of LEMS from the contract manufacturer until early twenty twenty five, which was a push out in the delivery of the first early adopter unit. And then and so from that end, we started production, we started getting units from them, and so I think we’re in a good shape there. The goal over the quarters and months ahead here is going to be scaling up the throughput. And then on the depowder side of things, so a little bit more color, for anyone who’s not familiar with additive printing.

So you’re taking basically metal powder and welding it, and that’s what’s producing the parts. But what that means is there’s a lot of residual metal powder in the part around the part that you need to remove before using it. And what we found was, we were getting some metal powder trapped that we weren’t able to extract out of the process sufficiently, so we changed our cleaning process. But then even still, we see opportunities where we can do some part enhancements, changes, improve the cleaning even further as we go forward. So that’s something that will continue to happen, but we have gotten to a point where we’ve been able to clean the parts sufficiently enough to start shipping these units.

So hopefully, I had some helpful background on kind of what we encountered as we’re getting these early units ready. We believe we’re in a good position now, but we’ll continue to work on refining them as we go forward.

Sean Mulligan, Analyst, Janney: Great. Thank you for all the time, Thomas.

Thomas Healy, Chief Executive Officer, Hylian Holdings: Great. I believe that concludes the questions we had. So I appreciate everyone joining today’s call. A lot of progress over the past quarter. Extremely excited to get this initial early adopter unit out there.

Excited to, over the months and quarters ahead here, to continue to deliver additional early adopter units, and then to continue to update you on the next earnings call as to how those deployments are going and the performance of the systems. Thank you all for joining.

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

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