Hello, everyone, and thank you for joining us today as we're gonna be sharing more about a special announcement we made this morning of the acquisition of a KARNO generator technology out of GE's Additive division. Now, before we dive in and share more on how this generator technology works and what are some of the benefits of it, I wanna start off with doing a look back on how the energy sector has evolved over the last 50 years. On the slide here, you can see back in 1971, where the different sources of electricity came from for the electric grid versus where we are today. Now, some of the interesting numbers on this slide are that 50 years ago, over 50% of the electricity we utilized was coming from coal-fired and petroleum-based power plants. Fast-forward to today, that number is now less than 25%. One of the other interesting things is that we only saw a 3% increase in the amount of renewable electricity. Overall, we have made great strides, and specifically around our reduction in using petroleum in order to produce electricity. Unfortunately, this isn't the case with the transportation sector. As we can see on the next slide, almost all of the vehicles that are sold on a yearly basis are utilizing petroleum in order to power the vehicle. We only have to do a 20-year look back here in the passenger car space to really see when the evolution started taking place. Back in 2001, 99% of the vehicles were petroleum-based, and only 1% were utilizing an electric powertrain, and that was even a hybrid system. Fast-forward to today, now about 10% of the vehicles that are sold have electric drive systems in them. As we look at the semi-truck market, it looks almost identical to where we were 20 years ago in the passenger car space. Almost all the vehicles are powered off of diesel fuel, and only 1% of the market is actually using alternative fuels. As we look about where we're going in this sector, there's an overall shift to move off of petroleum-based fuels, but I don't think anyone can say exactly what is going to be the makeup of the different types of fuels 20 years from now. We suspect there's going to be renewable natural gas, hydrogen, electric vehicles, and maybe even others. That's why as we go through today's presentation, we're gonna share more on why we're so excited about how the KARNO technology is going to position us well in order to be able to adapt to what fuels are gonna be utilized in this sector. Before diving into more on the KARNO, I wanna start off with just sharing a little bit about our vision as an organization and how we've laid out a path to hydrogen and broken it down into a three-stage approach. The first one is our Hypertruck ERX, which is a fully electric drive range extender vehicle that leverages an onboard natural gas generator in order to charge the batteries. Phase two is what we're now gonna call the Hypertruck KARNO, which is gonna leverage the KARNO generator in order to charge the batteries, and this vehicle will be fuel agnostic. Then lastly is a hydrogen fuel cell solution, which will be a purely hydrogen-based vehicle. The interesting thing with this three-stage roadmap is that the rest of the powertrain outside of the generator stays the same, and the only thing that we need to change or evolve as we go forward is the power plant to onboard the truck. With that, we're excited to share a little bit more about the KARNO generator. You can see a picture of what it looks like here on the slide. Throughout today's presentation, I'm going to share more on some of the efficiencies, the emissions, as well as different fuels that this generator can use in order to revolutionize this industry. Before we dive in, I wanna give a little overview on how this generator was invented. It came out of GE Aerospace, specifically their division around additive manufacturing, where they actually thought about leveraging new manufacturing techniques, specifically 3D printing, in order to make some of the components that go into the generator. This is a 3D-printed part, fully metal system, and as you can see from the design of this, it really opens up the ability for us to use new designs that aren't constrained by conventional manufacturing processes. That's gonna allow us to really increase the overall efficiency of the generator 'cause we can rethink how heat is transferred throughout the system and how efficiently we can convert that fuel into electricity. Now, GE also leveraged some of their knowledge and learnings from their aviation division, specifically around jet engines and how to best handle fuels going into these type of generators. To share a little bit about how the generator works, it is a hermetically sealed linear generator system. Some of the details behind it. First is when you take that fuel in, our goal is to convert that fuel into heat, and we actually utilize a flameless oxidation process in order to do that transition, and then that heat drives a sealed linear generator, and that linear generator is what produces electricity to charge the battery pack. Now let's dive into a little bit more about the benefits that this generator can provide. The first is that it's fuel agnostic. It can leverage over 20 different fuel types, whether they're gaseous or liquid form. Second is that we pull forward increased efficiencies. We expect to see over 20% increase in efficiency of the generator. Lastly, we're reducing emissions. This generator is capable of running on hydrogen and pulling forward the emissions benefits from hydrogen, but it's also capable of running on other fuels, and even on those types of fuels, it has an ultra-low emissions profile, thanks to that flameless oxidation process mentioned earlier. To dive into the actual different fuel types, we've broken down into a few different buckets. The first is hydrogen fuels, whether it's gaseous or liquid, natural gas, we can use the various forms, whether it's renewable, compressed, or liquefied. This generator can also run on conventional fuel types, as well as alternative fuel types that haven't conventionally been thought of as being the fuel of choice for the transportation sector going forward, but this generator is capable of running on those. Going back to that initial slide where we laid out, you know, what is going to be the mix of fuels going forward, this one generator will be capable of running on many of those different fuel types. It's going to be able to do it in a way where it pulls forward far superior emissions benefits when comparing it to conventional generators today. We actually looked at what CARB and the EPA has already come out with from emissions standards as well as what they're expected to come out with in the years ahead. We're confident that this one generator solution, even when running on conventional fuels, will be able to qualify for all those standards. Next, we wanna talk a little bit about the efficiency of this generator. The importance of efficiency is really, you know, if you can convert fuel into electricity more efficiently on board the truck, you're ultimately going to reduce how much fuel the truck is going to need and then also reduce what are the operating costs for a fleet to actually run this vehicle. As you can see from the slide, the KARNO generator brings forward a far superior efficiency when comparing against fuel cells as well as when comparing it against internal combustion engines. The slide you're looking at here is operating all three of these generators on hydrogen. Now, not only is efficiency one of the big focuses of the generator, but we wanna also pull forward some additional benefits for fleets and for drivers. First is that this generator is modular, so we can either scale up or scale down the number of linear generators in the power plant in order to be able to optimize the amount of power that the vehicle needs. If we go into smaller or larger vehicles, we can scale appropriately. The second is that we're going to reduce the amount of noise and vibration out of the vehicle. When you think about an internal combustion engine, you basically have explosions happening within the cylinders that's driving the pistons. Those explosions are. They're loud, they create a lot of vibration. Well, since we're using a flameless oxidation process, we don't have that. We're gonna be able to reduce the noise and vibration out of the truck. Lastly, we expect to be able to improve maintenance of the vehicle as well. Since this is a hermetically sealed system and there's only one moving part per generator, we envision we'll be able to reduce the amount of downtime of the vehicle and improve the overall maintenance schedule of the truck. Hopefully you can see by this point why we're so excited about this solution, both from, you know, emissions being number one, efficiency, as well as kind of staying in a future-proofed type of a solution. We also see that there are other markets or industries we can go after with the KARNO as well. To share one example, we've heard time and time again from fleets that they struggle with as they think about adopting electric vehicles, plug-in electric vehicles, specifically for short- haul and final mile. The grid and the power supply going into their buildings are not able to supply enough electricity to actually charge these vehicles, and they're limited by the number of vehicles that they could actually deploy. Well, with the KARNO, we could actually deploy these in a distributed power application where we could actually be the provider of electricity to these chargers in order to fuel up these electric vehicles. This is just one example of where this could be used, but obviously one that hits close to home for the customers that we're dealing with. We can also do it in a way where not only are we solving the lack of supply of electricity from the grid issue, but we can pull forward a cost benefit, as you can see on the right-hand side of the screen, to actually do it much less expensive than the conventional electricity that you're buying off of the grid. Lastly, I just wanna share a little bit on the actual transaction itself. This is structured as both a cash and stock acquisition. We're gonna be integrating the team who actually developed this technology into being Hyliion employees. We're acquiring the intellectual property around the generator, as well as some of the machines needed, some of those 3D printing machines mentioned earlier, in order to continue to commercialize this product. Lastly, I'm excited to share that we'll be opening up a Cincinnati, Ohio, Hyliion office, where we'll be housing the GE team who developed the KARNO. Now to start, we're gonna be keeping them in the same building of where they initially created this, and they'll continue to work on the design, prototyping, and testing of the generator in order to get this ready for commercialization. Then they'll work closely with the team here in Austin to actually integrate this into a vehicle in order to create the Hypertruck KARNO. Now that we've shared more about the KARNO generator and some of the innovations it pulls forward, you can see why we're so excited about this solution for the transportation sector. We truly believe this is an innovative yet practical path to a hydrogen-based future. We'll now open the call up for any Q&A. Thank you. Gentlemen, as a reminder, in order to ask a question via telephone, simply press star followed by the number one on your telephone keypad. If you would like to enter a question via the webcast portal, please submit your text question in the Ask a Question toolbar located on the right side of the web console and hit Submit. For all questions today, we ask that you please limit yourself to one question and one follow-up. Thank you. We'll pause for a moment to compile the Q&A question queue. Please stand by. Your first question today comes from the line of Bill Peterson with JP Morgan. Your line is now open. Yeah. Hi. Thanks for taking the questions and an interesting technology. I guess the first question is when does Hyliion plan to integrate, you know, such products into trucks? You know, then from there, how long does it take before commercialization? My sense is that I think 3D printing and additive is interesting, but we've seen a lot of cases in the past where it takes quite some time to, you know, move from sort of R&D phase into volume. If you can share any thoughts from your time in this, that'd be helpful. Absolutely. Thanks, Bill, for the question. First, to when are we integrating into a vehicle? We're actually already working on that, and we've already got that truck under development, and we expect it to be on-road and going through validation starting in the next couple of quarters. Now, to your question, from there, when will we actually move it into commercialization? We expect it to be a couple of years after the launch of the Hypertruck ERX. As we've shared before, the ERX, which is leveraging a natural gas onboard generator, will go into production at the latter part of 2023, and then we envision this being a couple of years after. Now, to your point on the 3D additive manufacturing, this is actually one of GE's specialties. This technology, the KARNO generator, actually came out of the additive group and as well as the aviation division. They're using the latest and greatest in additive machines and they've already been able to prove out making components for automobiles, for aircraft through 3D printing. We're leveraging that same great technology that GE's producing. Okay. Thanks for that. Maybe sort of a two-part question on sort of your added cost. I mean, how much should we expect for additional OpEx per quarter, per year and the growth of that? It sounds like you're getting some pilot production capability, but how should we think about the long-term, you know, volume ramp? Is this something that Hyliion would own as sort of vertical or somebody else would manufacture? What are the potential CapEx implications from this? Sure. I'll start with the OpEx then move over to the CapEx. On the operating expenses side of things, we're expecting about a $75 million-$100 million increase in OpEx from now through the commercial launch of this solution. As mentioned on the last question, that's a couple of years after when we launch the ERX. When you think about kind of conventional engine manufacturing, I mean, sometimes it can be extremely capital intensive in the R&D side and you know, even the OpEx can be extremely high. We're not seeing those same sort of levels. That's where we expect a $75 million-$100 million of incremental spend over those years in order to commercialize this. One of the things we've shared before is, we have enough capital on our balance sheet already. As we shared in the past earnings call, we closed last quarter with about $500 million on our balance sheet, and that's enough capital to be able to bring us through the commercial launch of the ERX. We've shared that before, and we see that statement is still true even with this acquisition. We believe we're still in a very strong capital position, which that's one of the reasons why it actually led us to be able to do this transaction, because of that strong position we're in. On the transaction and manufacturing strategy? Yeah, absolutely. Cheri, do you wanna take the CapEx and manufacturing strategy? By the way, for anyone who's logged in, Cheri Lantz is joining us, our Chief Strategy Officer. She's calling in actually from the Ohio facility. Yes. Hi, everybody. I'm glad you could join today. When we think about manufacturing, we are, with this deal, stepping into a handful of additive machines that are going to help us through the prototype and development and in fact low- volume production with this equipment. As we move to higher- volume production, we're very much planning to take an asset light approach. The direction that some of the GE Additive team has taken historically has been working with external partners that help you go to scale in additive manufacturing. They're well- established already. Our plan is to work with those contract manufacturers to scale in a way that keeps to our strategy. Your next question comes from the line of Graham Price with Raymond James. Your line is now open. Hi. Good morning, and thanks for taking the question. Looking at slide 5, it looks like the footprint of the KARNO is a little bit smaller than the CNG RNG generator. Just wanted to see, are you able to see some material weight savings from this design? Will that have any kind of follow on to savings when designing the trucks? Sure. We are targeting not only a reduction in size of the generator compared to the one that we use today, but we're also expecting a reduction in weight. Now, we haven't come out with exact numbers yet because as we shared on the call today, we are still going through the commercialization phase of the generator technology. You know, as mentioned before, the initial one will be in a vehicle out on the road in the next couple of quarters here. The development's well underway, but we're not ready at this point to kind of put out exact numbers around weight and size of the generator. As you're thinking about it, you are correct in what you mentioned of this is gonna be, you know, smaller and lighter than what we're presently pursuing with the conventional natural gas generator. Okay. Got it. Understood. I guess for my follow-up, given the heat requirement that you talked about, do you see the same efficiency gains at all temperatures? I guess, also on that, are there, you know, kind of optimal operating temperatures for this or is it pretty agnostic there? Yeah, I believe it's pretty agnostic and I'll let Cheri chime in more on this, but we see that we'll be. You know, those efficiencies will be able to be achieved in the standard operating temperatures of trucks, whether it's if it's cold outside or it's hot outside, you know, we would still be in those same ballpark efficiencies. Maybe Cheri, if you wanna just share a little bit more on kinda how the tech works as well, just to highlight that. Yeah, I think that would be helpful. Let me just take a step back, and then I'll come back to that. How this engine is different. The basic principle is that the fuel is oxidized to produce heat. We use the heat to pressurize a linear motor to create electricity. That's different than a traditional internal combustion engine, in that the fuel oxidation doesn't directly drive the linear motor. It's separated and the linear motor is sealed. Which one gives us the flexibility that we've talked about with the different fuel sources, because you really just need heat to drive this motor. The second thing that's different is the flameless oxidation process, which is a sensitive control over the oxidation process that leads to really low- emissions. The way that this generator operates is it's a continuous operation, so it doesn't need to go up and down with transient response with the truck, different from a generator that's coupled to the wheels. This is really an optimal operating characteristic for this generator. In fact, we can keep it at consistent temperatures because we recirculate the heat to the hot side consistently, so it is kept constant versus the ambient in the vehicle. We do expect that the efficiencies are very consistent across the entire power cycle. That's actually one of the benefits of this heat cycle generator. We expect some nice gains on efficiency in our application. Got it. Very thorough. Thank you very much. Your next question comes from the line of Noel Parks with Tuohy Brothers. Your line is now open. Hi. Good morning. Morning, all. Just a couple things. Did you have your eye on KARNO for some time, or were there similar technologies that you evaluated? Yeah, that's a great question. We had kind of seen for a while that going into a fuel agnostic solution is the right way to go to a hydrogen-based future. You know, if you can actually deliver a truck to a fleet that's future proof, that opens up kind of a new world of opportunity. We kinda had this fuel agnostic concept, but where this actually derived was close to a couple of years ago, GE actually reached out to Hyliion. They were working on this generator internally. It was a skunkworks program. It hadn't been publicly announced. Up until today, actually, no information on this KARNO generator has been publicly announced. This was something they had been working on for a while, coupling additive manufacturing with the aviation division and jet engine technology division. They reached out to us saying, "Hey, the Hypertruck platform is a perfect fit for this KARNO generator." We've actually been working together for a while now, actually integrating this into a vehicle. That's why, you know, I mentioned in the first lead-in to this that, you know, we're only a couple of quarters away from actually having this out on the road for initial testing. GE has already had this on, you know, dyno and testing it, so it's been well under development already. As we were working with the GE team and we saw the benefits of the KARNO generator, it sparked our interest to say, "Well, why don't we actually look at making this a part of Hyliion, because it's such a perfect fit for our business plan." We had already told the world that we were gonna have a fuel agnostic generator, and that's what led to the acquisition. Oh, got it. That does sort of fill in that gap of how you got to the fuel agnostic sort of philosophy. Just curious, as far as the, I mean, what you anticipate for the ultimate manufacturing, are you aware of any particular supply chain implications or challenges? I'm just curious whether you think it'll be more challenging or less challenging to develop this outside GE's umbrella. 'Cause I imagine GE would give you clout with suppliers, but on the other hand must have been more bureaucratic. Sure. When we bring this into commercialization, hopefully we're not in a supply market like the one we're currently in. Hopefully things have calmed down a little by then. No, we do see that supply will be a key focus here. GE obviously has owned the relationship with the suppliers for the generator up till now. With this acquisition, we have structured a transition agreement with GE. The team is actually going to stay in the GE facility upon acquisition for the beginning part of Hyliion taking it over. With that, we'll also be transitioning those suppliers in time over to Hyliion's ownership and carrying them forward. I think we've got a roadmap and path here established that we can make this transition seamless, and hopefully the supply markets are just more favorable in the years ahead. Great. Thanks a lot. There are no further audio questions at this time, and we will now begin text-based Q&A from the webcast attendees. Good morning. My name is Ian Rhodes, and I'm an investor relations representative for Hyliion Holdings Corp. Our first question, submitted by the audience, came from Mark Delaney with Goldman Sachs. What operational steps need to happen to bring KARNO technology to market? And the follow-up there, how does the cost of the KARNO generator compare with the original generator in the already previously announced Hypertruck ERX? Yes. I'll take the latter part of that question and then ask Cheri to step in and cover the path to commercialization. In terms of the cost, we do expect this to be a premium to our other solution, the Hypertruck ERX. As we've shared before, that will be a premium to diesel vehicles. As we spoke about on our last earnings call, at this time we're not ready to publicly share an MSRP around the vehicle, and that's purely just driven off the fact of the supply markets are just shifting so much today. You know, we wanna be able to come out with an MSRP that we'll be able to hold for the long- term. At this stage, we're not ready to discuss actual pricing, but we do see this will be at a premium. The good news is that it's also pulling forward strong efficiency benefits, and thus it's gonna reduce the operating cost of the vehicle. With that, we expect that this will actually be able to provide to the fleet a stronger economics as they go forward because of that increased efficiency of the vehicle. Then, Cheri, do you wanna talk through kind of the path to commercial? Yes, sure. I think that's really important, and we're spending a lot of time thinking about that right now. Certainly where we are in the development cycle is we're validating the technology itself right now. As Thomas mentioned, we're working on also demonstrating it in our Hypertruck platform. That's the first step. Beyond that, as you can imagine, there's a fair amount of validation just to ensure that we achieve the performance we expect to, that it's consistent over time, and we have the durability we expect. There's a DVPR, design validation plan and report plan, that has to go through for each of these components in the full system. Beyond that, there's a certification process that we have already begun thinking about, but we need CARB and EPA certification to ensure we're meeting those criteria. There is also a supply chain element, as discussed a few minutes ago. It's important that we get production-level supply chain established, and make decisions between current prototype suppliers and at scale production suppliers. Then finally, I mentioned that there were at volume additive manufacturers that are out there. We do need to make an evaluation of the right partners for Hyliion as we go to at scale production. We have several work streams that still need to come together to bring this to a commercialization. We envision as we bring in this group, it will start and be housed to start under the strategy and innovation team as it's in its development cycle. Going forward, we'll be complementing that team and building it out to support the commercialization needs we have. Thank you. Our next audience question: Is there an impact to the Hypertruck ERX timelines that you've already shared? Yeah, great question. There is no impact to the ERX timing. That remains the same. As we shared before, our path to bringing that product to market will be a late 2023 commercial launch. That's also coupled with some key milestones from here to that point, where we'll be starting controlled fleet trials later this year. We'll continue to expand fleet trials next year, as well as go through CARB and EPA certification on the ERX solution. Then that puts us into commercial launch in late 2023. This acquisition of KARNO and making the KARNO our fuel-agnostic generator solution will have no impact on the ERX commercialization plan. We will return to the Q&A audio for one more question from Bill Peterson with JP Morgan. Your line is now open. Yeah, thanks for taking the additional questions. After, you know, the commentary you just said, I guess I'm wondering, what does the agnostic solution you have mean for the timing of a fuel cell-based truck? What I'm getting at is, I mean, does it have any effect at all? Like you would be, let's say, sometime after the fuel agnostic or for example, is it related to how well the execution goes on bringing this to market either, let's say, in line or perhaps if it's delayed in some way? Yeah. At this stage, around the fuel cell side of things, we still see that as a viable solution for the Hyliion long-term strategy. We really see that, you know, the Hypertruck KARNO will be more of the first step into a future-proof fuel solution, as opposed to fuel cells. The reason just being is that if we can provide a truck that at least can run on natural gas, but then they can similarly run on hydrogen or on other fuel sources as well. That gives them a lot of flexibility. As we shared throughout the presentation today, the current numbers that we're seeing from, you know, the testing and validation of the KARNO system are extremely high- efficiencies and great emissions profiles, even when running on conventional fuels. From that standpoint, we see this as a very strong path to start in this transition to alternative fuels in the future. In terms of the exact timing around the fuel cell side of things, that is something that we're still working on. We'll come out with more information on that as we go forward. I think from a market standpoint, this KARNO technology showcases, you know, Hyliion has a very strong path to being able to incorporate in other fuels, including hydrogen. That's one of the big drivers we've seen from fleets. They wanna make sure they're future proof for what's to come in the years ahead. Okay. Thanks for that clarification. You mentioned some other opportunities, you know, I guess adjacent or non-trucking. What type of additional work would have to be, you know, done in order to prove that out? And is there any way even to give some sort of potential view on sizing additional opportunity? I realize it's early, but try to help us characterize what applications could exist. You're right, it is early. We are excited about the other opportunities, though, because we see this as a good fit for a generator inside the truck. As you saw from one of the earlier slides, the price at which we can produce electricity from this generator is staggering, right? It's significantly less than the cost of grid electricity. One of the things we've done with the design of this is we've tried to keep in mind that as we're designing the generator for the truck, that same generator, at least very similar, could be deployed in applications like a distributed power generation. The example we gave, which kinda hits close to home with the fleets we work with, is, could the generator actually be the production or the supply of electricity for EV chargers? 'Cause that's a problem that fleets are facing on a daily basis. You know, we could potentially piggyback on customers that we're already working with, who are saying, "Hey, the Hypertruck powertrain platform is right for the long- haul, but now the KARNO generator could actually be a solution on how I could provide power to my local delivery BEV vehicles as well." We're trying to keep in mind that, you know, if we can leverage commodity the scale and design the generator to be the same or at least very similar in a truck and in a distributed power generation unit, that's a smart move. That has been something we've been working towards. Yeah. Okay. Thanks for taking the additional follow-ups. Absolutely. Returning to our audience-submitted questions now. How does the 20% of generator efficiency that you've mentioned, how does that transfer percentage-wise to diesel fuel savings? Sure. I would look at those as pretty similar, you know, type of metrics, right? Because in that 20%, that is a fuel to wheel efficiency. That's taking into account the losses of going through the electric motors, going through the conversion of fuel into electricity. That will equate to a pretty similar representation in fuel economy numbers. Now, as we've stated throughout this, we are still in the development phases. Those projections have come from initial testing we've done, and we'll continue that testing as we go forward. At this stage, we're very excited about the efficiency gains that the generator is providing or we've seen to date. We expect that to be a big driver for why fleets would want to adopt a solution like this. Our next audience-submitted question: Is this announcement going to impact any of Hyliion's other corporate relationships with either Cummins or any of the Hypertruck Innovation Council members? Sure. Yeah, there's a couple aspects. There's the fleet side, there's the supplier side, collaborators. We don't see this as having a very big impact on that. I mean, some of the ones that were mentioned, for instance, Cummins, we're going to be going to market with the Hypertruck ERX with the Cummins engine in it. With their recent acquisition of the Meritor axles, we also have those in our solution as well. Those other powertrain components, we plan on carrying those forward into the Hypertruck KARNO, into the Hypertruck fuel cell solution as well. We've got great relationships with a multitude of companies and we don't see this impacting those. We actually see this as being very additive and incremental to our business opportunities. You know, as we go forward, we'll look to even expand further relationships such as, you know, what Cheri was mentioning earlier of partnering with other companies in order to actually do the manufacturing of this for us so that we can continue to have an asset light model. Thank you. That concludes the audience-submitted Q&A. Perfect. Well, I'll close the call with just saying thank you to everyone who logged in to listen to this. As you can see, we are extremely excited about this solution. It's something we've been working on for a while, and we are thrilled to be able to say today that this will now be shifting over to being part of the Hyliion family. We look forward to having that team join us and continue this development and ultimately bring forward the Hypertruck KARNO solution, which we think will offer a ton of benefits to fleets and to the companies we're working with. Thank you all for taking the time today, and we'll chat again soon. Thank you again for joining us today. This concludes the Conference Call. You may now disconnect.