All right. Thank you for joining us this morning for the Needham Growth Conference. We're really excited to host Hylion this morning. We have Thomas Healy, the CEO, and John Panzer, the CFO. We're going to start with a quick presentation from Thomas, and then we'll move into Q&A. If you have a question, you can use the chat box at the bottom of your screen, and we'll make sure the question gets asked. Otherwise, we have some prepared questions, and we'll keep this to about 45 minutes. Thomas, with that, I'd like to hand the call over to you.

Thanks, Sean. Hi, everyone. For background, Hyliion is a company focused on power generation, so a pretty good sector to be in right now. You can see our product on the slide here. Each one of those boxes represents about 200 kilowatts of power gen, and our vision, our focus is enabling on-site, behind-the-meter production of electricity to enable people to remove their dependency from the grid and make their own power. So for a little bit of background, you know, if you think about like a Walmart or a Home Depot, you could put one of these boxes outside and now remove your grid interconnect or remove your dependency from buying from the grid and make your own power and do it for cheaper, cleaner, and more reliable than grid electricity. And then if you think about those two different sites, like one Home Depot would use about, or a Home Depot would use about one of these boxes. A Walmart would use about two of these boxes, and that's because they have the refrigeration for food on site as well. And then a little bit of background on the market and industry. I think hopefully this is no surprise to any of you, but the power sector is in massive growth, high demand. A lot of that is coming from the data center sector. one fun anecdote from that is one of the hyperscalers in 2025 was using about six gigawatts of electricity by 2030 they're planning to use 40 gigawatts of electricity and that's just one of the companies in that sector and and then you see some of the other examples on the left hand side as well all this comes together to really push for we believe the model going forward is going to be a distributed grid, which means as opposed to having one big power plant that pushes electricity out to everywhere, you actually have on-site generation now at those end locations that can not only feed the facility they're at, but then even potentially backfeed into the grid as well. A little background on us as a company. So I founded Hylian back in 2015. We went public on the New York Stock Exchange in 2020. If any of you have been following our story for a while, you may know that we actually originally were in the electric vehicle, electric semi-truck space. And then we saw that industry was struggling. And thankfully, we made the decision to pivot out of that space a few years ago and go all in on power generation. And we did that at a time of strength where we had a strong balance sheet and we had a great technology in Carnot generator, which was actually something that we acquired out of GE Aerospace. So back when we were in the EV trucking space, GE actually approached us, said, hey, we got this awesome technology. We think it would be great for charging the electric vehicles. Would you guys want to work together on it? We did. We started co-developing the Carnot. And then fast forward a couple of years after that, we actually acquired that division out of GE. And then shortly after that, we decided to go all in on this sector. So markets that we're going after, number one by far is data centers. So we've been able to sign interests of over or just about 500 units of Carnot generators. And over half of that is coming from the data center sector. We also have a strong interest in the defense base. The Navy has selected us for one of their unmanned autonomous ships. So if you think about an unmanned vessel, there's no one there to do oil changes to maintain the engines. And so that required a need for a very low maintenance solution, which the Carnot is able to deliver. And then we're also going after the waste gas sector because Carnot can use impure fuels. It's truly fuel agnostic. I'll get into some details on this, but waste gas is a very promising space for us, EV charging, and then prime power, which is like the Home Depot, Walmart example I used leading in. And then the last thing I just want to highlight on this slide is that we recently announced this past year that the Carnot technology will qualify for a 30% tax credit starting here in 2026, and that will be in place for the next 10 years. So that's effectively like a 30% discount that our customers will be able to take advantage of. All right. So then shifting to what is the actual tech? So if some of you are covering this space, you've probably come across companies like Bloom, which is doing fuel cells. You have the Cummins, Caterpillars, Jambachers of the world who are doing internal combustion engines. And then you have also companies doing turbines. We are a new technology. So it's a linear heat generator based off of Sterling engine technology. Uh, Sterling's is concept started about 200 years ago is when it was invented, but it really hasn't gained traction because it's always been extremely difficult to manufacture. Even 200 years ago is known that the Sterling's were the most efficient or had the ability to be the most efficient, had the ability to be very low maintenance, but you couldn't manufacture them. And so there's been a breakthrough in manufacturing thanks to 3d printing. And so what we're doing is we're actually additive printing or additive manufacturing a lot of the key components that go into this solution to bring it to market now, 200 years later. Then you take that four shaft system, which produces about 200 kilowatts of electricity, and you move that into a power module, which has all the balanced plans, fans and radiators. So that one box can sit at a facility. All you have to feed it is fuel, and then it's able to convert that into electricity. And then everything that's needed is encapsulated in this. So pumps, fans, compressors, radiators, things like that. We're also developing a two megawatt solution. So as you think about that data center sector, as you look at the oil and gas space, they're talking about needing tens, in some instances, hundreds of megawatts of power. And so stacking a bunch of these small 200-kilowatt boxes together doesn't make a ton of sense. So that's why we've actually are working on developing a 2-megawatt solution as well. And then those can still be stacked together to get the exact amount of power you need. And for reference, that 2-megawatt is about a 20-foot shipping container footprint. So that's extremely power-dense compared to some of the other solutions that are out there. And it's very modular. It can be plopped down at a facility. It can be moved. As you need more power, you can stack more of them together. It's a very different equation than if you went out and bought a 50-megawatt GE Vernova turbine, where that's the amount of power you're going to have. This is something that you can scale up or scale down as your needs require. In terms of the benefits the product offers, so true fuel flexibility, this is like one of those really unique things to us where it can operate on over 20 different fuels. So natural gas, propane, diesel, hydrogen, ammonia, it's a box that you can actually switch which fuel you're feeding it on the fly, and the system will respond accordingly and continue to operate. so you don't even have to turn it off as you're switching fuels. Low maintenance, so there's only one moving part inside each one of those shafts. I'll show that in a slide here, but that allows for very low maintenance, no need for oil changes. There is actually no oil in the system, unlike a conventional internal combustion engine. Superior efficiency, so for reference, the wall outlet, an average wall outlet in the U.S. is about 36% efficient. We're targeting up to 50% electrical efficiency, which is a pretty big step change compared to the grid. And that's what enables you to actually make lower cost electricity on site than what you could buy from your utility. And then lastly is ultra low emissions. So those numbers that are referenced there, those are some of the most strict standards that are in place out in California. And we're able to surpass those even when running on fuels like natural gas. All right. So then I'll spend a second just covering what is this technology. So I mentioned on the previous slide, it's a linear heat generator, but to walk through how it works. So we produce heat out in those orange areas by reacting fuel. So think of like a stovetop burner. You can run your stovetop on natural gas. You can run it on propane. Same thing with us, just with a lot more variety, we can run on those 20 different fuels I mentioned. and uh and then all that's doing is making heat and it's trying to heat up the metal of the system and then in the red and blue areas is where we have trapped helium and so the way a sterling engine works is you have trapped gas and then when you heat up that gas it wants to expand and then you cool that gas back down and it contracts and expands contracts and that's what we're doing at about 20 times a second inside this system and we're heating up the red area getting that gas to expand. It pushes the piston one way, and then you do the opposite reaction on the other side, and it pushes it back. And then in the center, we have a linear electric motor. So think of like a car that has regen braking, an electric vehicle with regen braking. As you let off your gas pedal, you actually start producing electricity and charging the battery pack. We're doing the same thing in the center of the system here, where as the shaft is moving back and forth, we're producing electricity and that can be supplied to a battery or directly to your facility or into the grid as well. I mentioned, you know, back when we were talking about Sterling's, one of the big unlocks is additive manufacturing, 3D printing. So this is a picture of our actual facility in Austin, Texas, and some of the parts that we're making, like the one on the left-hand side here. And this is really the unlock to the efficiency, the fuel flexibility that we're getting is thanks to the fact that we can now kind of rethink how parts are designed because they're going to be printed as opposed to made through like conventional CNC manufacturing. And then I wanted to just cover us compared to some of the other solutions that I mentioned earlier, as you can see on this slide, and whether you look at the actual electricity cost or emissions, maintenance footprint, we are at the top or one of the top solutions. And the only area where we are not at the top is on the upfront cost, which an internal combustion engine is less expensive than us. Now, granted, a fuel cell is more expensive than our solution. But what's unique is since we have such a high efficiency and we use less fuel, that means you're going to spend less on operating costs. And we have a very low maintenance profile, so that allows us to get that top bar, the low-cost electricity as compared to other solutions. With that, I'll hand it over to John, maybe just to give a kind of brief overview on

the company's financial position. Yeah, just some quick numbers. Looking back at our third quarter financial results and year-to-date results in 2025. I just want to point out a few things. We are generating revenue. As Thomas mentioned, we have a contract with the U.S. Navy to do research and development services to put our Carno power module in autonomous ships. So we're getting revenue for that work. Year-to-date, we've reported about $3 million, and we estimate the year will be about $4 million. I want to just point out some things on expenses. If you look at the total, we spent about $15 million in the third quarter and 51 year to date. That's pretty flat, both of those numbers with the prior year. We did have some expenses related to the shutdown of our former powertrain business. But most of the expenses, we just have about $5 million a quarter of SG&A that's actually down a bit. So, we're able to make the progress that we're doing in terms of developing the product without rapidly increasing spending. In fact, a lot of our R&D costs includes components that we're buying that will ultimately go into generator systems that we'll be delivering to customers. So, overall, about a $13 million loss, and that's pretty much the run rate for probably the last couple of years. If you go to the next slide, just if you look at the, on the right side, just our total cash use, we're estimating about $65 million once we report full year 2025 results. That'll be about $45 million, just a really much base cash spend to run the business, including that R&D that I mentioned, buying components and so forth. And then we'll spend around $30 million of capital expenditures, which we plan to offset with about $10 million of financing. And if you compare that to last year, we had some unusual items last year, including money spent on the power, I should say 24 money spent on the powertrain shutdown, and then we did a small share repurchase. But the numbers are pretty flat in terms of just the blue and the green, the base business, as well as CapEx. We haven't projected 2026 forward, but if you do extrapolate that forward, today we have, or at the end of the third quarter, we had $165 million in cash and investments on our balance sheet. So we have roughly three years of run rate. Again, just extrapolating. So we're in very good financial condition. We don't expect to have to raise any capital through commercialization of the product. And we're very much in control of our own destiny just in terms of having the cash and capital resources that we need to run the business. One thing we did mention in our most recent call, once we've commercialize the product and have proven it out and have optimized the existing printer assets that we have, we will be looking to scale up growth quite rapidly. And at that point, we'll probably be looking to raise some capital for printer purchases here at our Austin facility just to accelerate that growth. So I guess the key points here, we're starting to generate revenue. We have really a modest overhead expense structure with some capital investments, really have a great financial shape in terms of just being able to continue to develop our product and get it commercialized. And then we do expect some more rapid growth in the coming years as we get the product out in the marketplace.

All right, Sean, we'll hand it back over to you. I think we're going to do some fireside chat.

Yeah, so just a reminder, there's a number of people on the call, but if you have a question, you should be able to put it into the bottom of your chat box, and we'll make sure it gets asked. But I guess, Thomas, to start, you kind of gave a quick overview of the inline generator in Carno, but can you talk about, like, the different fuels you've demonstrated flexibility with, and then just, like, practically how that works within the system? So is it uninterrupted or is there some kind of, you know, changeover that needs to occur with equipment?

Yeah, absolutely. And I'll maybe start with just covering like the word fuel agnostic is not new. Like a lot of engine companies actually say they have a fuel agnostic platform. But what that means is they have some parts like the engine block that they could use the same engine block with a diesel engine, a natural gas engine, but all the other components need to change as they move from one to the other. That is not the same way we're saying fuel agnostic, but when we say fuel agnostic, it means like you buy this asset and that box can truly be switched from one fuel to the next without having to go in and do hardware changes. So we, to your question, Sean, we've done demonstrations on natural gas. That's the number one fuel, right? I mean, most of our customers are going to be using natural gas. That's what we do most of our testing with natural gas, propane. We've done customer landfill gas. So like think of methane coming off of a landfill. We went out to a customer site, actually captured the methane coming off the landfill and then ran it. We did the same exact thing for the oil and gas sector. We captured field gas or waste gas gas, so it would normally be flared, and we were able to demonstrate running on that. Just a funny one, after our holiday party, one of our employees won a bottle of vodka, and they took that back to the lab, and they actually showed that we could run our reactor on vodka as well. So not that that's going to be a very economical thing for customers to do, but the reason that it's truly fuel agnostic is because it's just this this constant reaction of the fuel so i mean to simplify think of like a flamethrower right where once you ignite it it's reacting the fuel and you can actually switch which fuel you're pumping in and now how much heat you make is going to switch because fuels have different uh btu contents but then we either scale up or down how much fuel you're bringing in based on the BTU content. So the last one I'll mention is we're also working on liquid fuels. So this was something that specifically the Navy really wanted, where they primarily run diesel fuel. And so we are working on a solution that actually can do both gaseous and liquid fuels. All of our early deployments are gaseous fuels like natural gas and propane, hydrogen as But liquid will be coming right behind it, and we're already demonstrating that at our facility in the lab.

Okay, great. And then on the federal level, I don't think it's regulated as an internal combustion engine. Is that correct? And how does that play into deployments and what you're kind of seeing in interest versus maybe like competing products on the RECIP or the turbine side?

It's a great point. so you're correct. This is a non-regulated technology per the EPA. So this was actually one of the things we worked closely with the EPA on in 2025. They obviously have standards, federal standards of internal combustion engines, emissions profiles, things like that. They looked at our technology and said, hey, this falls outside the scope of it's not an internal combustion engine. It's not a turbine. And so they actually deemed it, and we have a letter that states this from the EPA. It's a non-regulated technology under the Clean Air Act. Obviously, they looked at our emissions and profiles and were very pleased with them. And so from a federal standpoint, customers are clear. They're good to go. They don't need to go through any EPA permitting, anything like that. You do still need to work with your local air district like you would with any other technology. And then on that front, we've been working closely with SQ. It's the South Coast Air Quality Management District. I won't try to read out the acronym, but South Coast Air Quality Management District. And they have some of the most strict standards in the U.S. And they've actually come and tested our technology at our facility. They've run their emissions testing on it. And we've got close collaboration with them and believe that we will be good to go even at the most strict of emission standards on the local district, on the local standpoint here in the US. Okay. And from a commercialization standpoint,

I think you've completed 100 plus days of operation on a customer configured unit. But was there any unplanned downtime or hardware replacement during that? And then kind of like, what does the other schedule of early adopters look like for this year and units being deployed?

Absolutely. So we started back in early 25 is when we made our first transfer of asset from being owned by us to actually owned by the U.S. Navy. And then they've actually been paying us to run their asset at our facility, multiple of their assets actually, at our facility and run it through their load profiles. We recently made an announcement on that, run it through the durability testing. So the announcement you were referencing, Sean, was we ran that customer asset for 100 days with no unplanned downtime, no hardware issues. So that means that the system was available working. And that was huge for us, right? Because a lot of new technologies, You do have wear parts, you do have things you didn't expect, you do have parts that Thankfully, we were able to demonstrate that system was able to run successfully. That also then parlayed into a more recent announcement we made where we were able to showcase that we successfully demonstrated the U.S. Navy's load profile. So what that means is this technology is destined to go on a ship. And so they looked at their vessel and, you know, what sort of duty cycle it's going to run, you know, is it going to run at what power levels? And then they gave us that load profile to simulate. And we were able to successfully run through that, demonstrate the power output as they would have requested. And then from so that now unlocks kind of the next phase of the U.S. Navy development and contract where we'll go into longer duration testing. we'll go into actually simulating like ship motion as we're running the system. And then from there, actually getting this technology put on a vessel in the not too distant future here.

So, and then, yeah, outside of the Navy, one of the early adopters that, you know, how many units do you expect to deliver this year from an early adopter standpoint?

one. I'll start off with just saying we have not yet on our most recent earnings updated guidance for 2026. So we'll need to hold on that until an upcoming earnings call. But I can talk about sort of sectors that we're going into. So as we look at this year, we do foresee the Navy being a continuing customer. We are seeing a lot of interest in the data center space. And that's one where we're very excited about. And then we're also seeing that kind of standard commercial and industrial power generation. So think of like a warehouse or a box store retailer where you can actually have a generator on site, as well as EV charging. And we've been working on some of those projects for a while here where we'll actually couple our system directly to a charging pedestal and be able to charge delivery vehicles or passenger cars as well.

The, not like current pipeline, but like the last disclosed pipeline that you've talked about, can you walk us through, you know, kind of the non-binding LOIs you have? And then can you frame up sort of expected conversion, like what the pathway looks like from an LOI to a purchase or what you're hearing from customers? Like what do they need to see? and then what timelines that takes and just is like also your pipeline in terms of like units or revenue or how do you even talk about that i'll start with saying that um if you're kind of

looking at the the position we're in like demand is not our issue supply is the issue and so we've signed lois with customers for units that it comes up to just shy of 500 of these carnal cores. And so we've got a lot of interest, right? And it goes across those various sectors that I just mentioned. And so our big focus over 26, 27 is going to be how do we scale up supply? How do we make more of these systems and start to fulfill the backlog of those 500 LOIs that we've signed with various customers? I should note just for good governance, these are non-binding agreements. So there are customers coming in and saying, hey, we have this project, we want to deploy this many units at this project. But all this is predicated on us getting these initial units out there and making sure they're successful, right? That's the big milestone for us in 26 is customers want to see these units at their sites and operating and running well and actually delivering on the high efficiency, the fuel flexibility, the low maintenance that we've been promoting of the technology. Up till now, we've been operating these systems at our facility in Cincinnati, some being customer assets, some being assets owned by us. And then that next phase will be actually demonstrating it in the field. One of the things that is a catalyst to being able to do that is we are in the process of going through UL certification. That is all going well. We're pleased with how that's progressing. And then once we get that UL certification, then we can actually move to getting these assets out to customer sites. And on our last earnings, we had projected that early 26 is when we would be completing that UL certification.

Is there a way to think about unit economics at sort of commercial launch, like a target ASP for the 200-kilowatt module? And then is there a way to think about customer payback, like under, I know that you haven't commercially deployed them yet, but like in terms of what you've seen in your testing?

So I'll use some kind of generic general numbers here, but directionally we'll give everyone a good sense. I'm going to baseline it on a 200 kilowatt system. So if you think about our system at 200 kilowatts, it's about half a million dollars. If you look at an internal combustion engine that's designed for prime power, you're probably going to be around $300,000. So you are a little bit less, we're at half a million, the internal combustion would be at $300,000. But if you looked at a fuel cell, which a lot of these data center solutions are looking at fuel cells, they're actually more up around probably in the $600,000, $700,000 sort of a range now. And so we do, we kind of fit in the middle there. In terms of payback, because we use less fuel, because we're at the high efficiency, and because we have the projected lower maintenance, we're looking at paybacks usually are in like the three-year sort of mark when you compare it against grid electricity or when you even compare it against some of these other solutions that I, like an internal combustion engine that I just mentioned. Obviously, with a fuel cell out the gate here, you're less capital expensive. But, you know, and that is very attractive to a customer when you're talking about an asset that has 10 plus years of expected life and potentially much more than 10 years of life. And, you know, from our end, obviously, we just got to get out to get the systems out there and prove that. But when we're in discussions with customers and talking about us versus competing solutions uh customers love what they're seeing with us the thing that they're disappointed about is when can i get 100 of them when can i get 200 of them right i just had a dinner last night and the the guy sitting next to me uh is building a 200 megawatt data center and he's like when can i get those when could i get 200 megawatts and it's like you know that is

going to take us years to get there yeah i mean for the last kind of like piece of the call maybe we can switch to the supply chain and just sort of talk through current capacity and then practically like how does that scale is it getting more efficiency out of your existing printers or is it you know buying new printers how you see that working out for you sure i'll jump to this

slide here um you can you're seeing a very small snippet of our austin texas facility but our facility is aligned with these 3D printers. We've got ballpark numbers, about 30 of them in our fleet now. And they're sitting, I mean, they sit there and run, right? I mean, it's a very different equation where you don't even need personnel at the facility and these things are sitting there running, making parts. So to your question, Sean, we've invested, and John can share more on this, but the tens of millions of dollars into buying these assets, building out a chunk of our facility with 3D printers. And we're at this stage where we actually expect we have a good amount of printers and we don't see that we need to add a ton more in the short term here. It's more about let's utilize what we already have. And so we shared this on our last earnings. We actually expect that from a capital standpoint, we'll slow down a little bit there because we have an install base and now it's about get the utilization of those machines up and then from there we'll once we achieve that and we start scaling then we would look at adding additional machines but just for background of anyone that hasn't maybe you know probably a lot of people haven't seen you know these type of 3d printers there's a lot of opportunity for us to just speed up within the existing footprint of the machine. So there are levers we can pull like running the laser at higher power or printing at a deeper depth right out of the gate, which can take an existing asset and actually make it faster. And so those are some of the things that we're going to be working on this year. And then we're also looking at next generation of like laser technology that could actually take existing assets. You just upgrade the laser, and then that could actually get you faster speed as well. So all that being said, long answer, the conclusion is we've invested a good amount of capital. We have a good printer install base, and now the focus is on let's get throughput up.

Okay. And then like a theme at this conference, especially in like the drone and defense side, it's just kind of the scale of the proposed budget. So outside of the Navy program, are you working with anything else? on the, like, are there any other opportunities outside of the Navy program with, you know,

DOD? There is. And I mean, John and I have joked about, you know, some days we feel like we maybe should just be a defense company with the level of interest we're seeing from that sector. But obviously, you know, we want to go after the data center space and other spaces as well. But We've got the Navy contract. We announced a collaboration we're doing with the Air Force as well. We are looking at additional Navy programs, Army programs. And the military sees this as a very widely applicable technology. So we've talked about it going into a ship, right? But what if you take it and you put it at like a forward operating base where you're not sure what fuel is going to be available? Now you have one generator that could run on propane, could run on natural gas or the conventional diesel. Or if you think of a forward operating base, the riskiest job, from what the army has told us, the riskiest job is actually the fuel transportation. And so if you have a generator that uses less fuel, now you have to do less fuel transportation. The Army also has a huge focus on reducing the amount of individuals that are going to have to be at a forward operating base. Well, if they could reduce or eliminate the amount of technicians they need there to just maintain power generation, that's a huge benefit, right? So there's like these snowball effects, because if you reduce the amount of individuals, now you need less power. Now you need less food transportation. And so that that's one of the big focuses for the military right now. And thankfully, the Carnot fits very well into that. Sean, at least I was meeting that last time.

Yeah, I was saying we're coming up on the end of our time. We could probably go on for another 30 minutes. But like, you know, kind of last, you know, last thoughts for me, Thomas, would be great as we in the call.

Absolutely. So I think as hopefully many of you on the Coliseum, the power generation space, it's a great sector to be in. We need more power. We needed more power even before the data center boom. Now it's becoming more and more clear we need more power. And, you know, we believe that the model is going to shift to behind-the-meter on-site generation, and then we think Carnot is very uniquely positioned where it's this modular, very flexible technology that, in a lot of ways, we think almost future-proofs you to, no matter what the future brings of fuel choices and things like that, fuel costs, this system will be able to assist you.

Thank you, Thomas, and thank you, John, for the time this morning. Really appreciate it. Thanks, John.