Hybrid driverline developer Hyliion Holdings (NYSE: HYLN) used its Q1 earnings call with analysts Wednesday to talk about everything but financials.
The Austin, Texas-based startup declined to get into numbers because it is restating its full-year 2020 and first-quarter results to reflect stock warrants issued as liabilities instead of equity. The financials will be released May 24.
Hyliion, which went public in a business combination with Tortoise Acquisition Corp. last October, was able to cash in on its public warrants last year when its stock price was high enough to let holders purchase them at $11.50 each. Those purchase rights would be under water today based on Hyliion’s closing share price of $8.22.
Like many electric vehicle and infrastructure startups that went public in reverse mergers, recharacterizing stock warrants is creating noncash losses that do not impact operations.
At least 80 special purpose acquisition company (SPAC)-supported companies are reacting to April guidance from the Securities and Exchange Commission on warrant treatment, Hyliion Chief Financial Officer Sherri Baker said.
Hyliion now has delivered 30 trucks with its electronic axle-based hybrid system that boosts the power and efficiency of a diesel or natural gas-powered Class 8 truck. CEO Thomas Healy indicated the system in those trucks is undergoing upgrades that will support booking revenue on deliveries beginning the second half.
“We have experienced delays on the development of the hybrid improvements because of learnings that came from the design process and added testing and validation into the development cycle,” Healy said. For example, lessons from cold weather testing in Minnesota will lead to better reliability of the hybrid system, he said.
“We’ll be implementing major enhancements to the hybrid product beginning in the second half of this year followed by future rolling improvements,” Healy said.
Those changes will carry over into the Hypertruck ERX that will be given to certain fleets that have signed on as members of the Hypertruck Innovation Council. Hyliion is retrofitting Peterbilt Model 579s with its system.
Hyliion’s different approach
Founded in 2015 by Healy, Hyliion is taking a different approach to electrification. The ERX has a natural gas generator that makes electricity to power batteries 20 times smaller than those weighing thousands of pounds and reducing the freight volume hauled by a battery-electric truck.
If the ERX runs on renewable natural gas (RNG) made from farm waste and other biomass, its carbon emissions can fall below net zero, cleaner than a battery-electric truck. Healy said there are 157 RNG fueling sites in the U.S. with 155 more planned.
The recently announced innovation council and growing interest in RNG by fleets such as Amazon could allow Hyliion a significant niche.
The ERX is fuel agnostic. A hydrogen-powered fuel cell is an option when hydrogen is available at cost parity to current fuels, Healy said. The system is less expensive, runs cleaner than taking energy from the electric grid and has a range between fuelings of more than 1,000 miles.
Outside help and new hires
Hyliion is working with FEV engineering consulting to help get both the hybrid and the ERX to market.
“The commercialization development plan is requiring additional time. We’ve implemented a more formal, phased rollout approach,” Healy said.
Internally, the company hired 43 new employees in Q1, fewer than it had hoped.
“I think it is still significant growth for the organization,” he said. “The hiring continues to ramp up. We’ve been able to bring in top-talented individuals into the organization.”
Like most manufacturers and Tier 1 suppliers impacted by a semiconductor shortage and supply chain bottlenecks, Hyliion is waiting longer for some parts and components.
“We’ve also seen some of the other other components we were planning on using [and] we’ve had to shift and start sourcing other components because of the unavailability,” Healy said.