Q4 2021 Hyliion Holdings Corp Earnings Call
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Good day and thank you for standing by welcome to the highly on holdings fourth quarter and full year 2021 earnings conference call.
At this time all participants are in a listen only mode.
After the Speakers' prepared remarks, there will be a question and answer session.
I would now like to turn the conference over to Adam Brushing.
<unk> financial planning and analysis. Please go ahead.
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Thank you and good morning, everyone welcome to higher end holdings fourth quarter and full year 2021 earnings conference call on the call today are Thomas <unk>, Our Chief Executive Officer.
Sherri Baker, our Chief Financial Officer.
The slide presentation accompanying this conference call is available on highly on Investor Relations website at investors on hiring on Dot 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 and as such are subject to risks and uncertainties. Many.
Many factors could cause actual results to differ materially from the forward looking statements on this call for more information about factors that may cause the companys results to differ materially from such forward looking statements. Please refer to our earnings press release as well as our filings with the Securities and Exchange Commission.
Forward looking statements speak only as of the date. They are made you are cautioned not to put undue reliance on forward looking statements and we take no duty to update this information unless required by applicable law with that I'll turn the call over to Thomas Thank you, Adam and Hello, everyone. Thank you for joining us today, our fourth quarter capped off what was.
The transformational year for highly on in our pursuit to becoming the leading provider of electrified solution for the commercial vehicle industry.
Looking back on our first full year as a public company. We reached many significant milestones in the continued growth of highly on we launched our new hybrid E powertrain and completed the first major product development milestones of our hypertrophy Rx. We also more than doubled the size of the team and expanded our board of directors with individuals who bring critical.
Expertise to help us achieve our long term vision.
In Q4, we reached another major milestone by recognizing revenue on our improved hybrid powertrain solution.
Sure It'll walk you through the financial details, but this achievement marks a significant progression in our technology with learnings that we continue to incorporate into our future product offering including the hyper truck as.
As we discussed last quarter November March the formal launch of our ride and drives series, which consists of ride along opportunities and in depth product education for the hyper truck <unk> and hosted multiple suites here at our headquarters in Austin over the past several months.
In addition to being a showcase for how the hyper Truckee Rx can deliver practical solutions for a wide range of customer needs and use cases, a ride and drive events are an opportunity to gain insight regarding our customers' real world challenges such input is invaluable to our development process as we made continuous improvements.
Two our product stacks and the feedback we received has been overwhelmingly positive.
Participants have cited the hypertrophy Rx as benefits of speed power and noise reduction.
Furthermore, I am thrilled to announce that earlier this week as a result of these events. We received orders for 100 units backed by deposits to secure hypertrophic <unk> production slots. We also received 325 reservations for future production slides. Please note that we had previously used the terms are.
Reservations in preorders interchangeably going forward, we will refer only to orders and reservations.
These orders and reservations were placed by five different fleets Dolly Transportation General Partners Group, Chairman Trucking VIP, Inc, and zero Max incorporated we will announce more details about each of them in the coming weeks.
We plan to continue to increase our order count as we near production as well as our reservation count to build a backlog and measure customer interest. These orders and reservations are subject to the finalization of commercial terms, but they reflect how the early adopters of our technology recognize highly has potential to change the landscape.
Trucking industry.
With the orders announced today, we now have 100 production slots confirms and reservations for nearly 2000 additional units.
We are excited to be turning to positive feedback we've received from our customer experience events into future sales.
I'd like to take a moment to share particular feedback we received from the numerous fleets who have experienced the hyper truckee Rx demo trucks over the past few months.
First everyone was impressed with the way the vehicle performed the vehicle is smooth quiet and has instant acceleration compared to a diesel many cannot even tell when the generator first kicked off and to begin recharging the batteries.
Second our level of integration is better than other electric vehicles that these fleets had experience for example.
Ample the way the vehicle shifts as much smoother and the interior maintain the same look and feel as a traditional truck.
Third there is no ranging variety associated with our solution.
One of the fleets shared has some BV trucks and their operations achieve only about 100 miles per recharge, which is enough to serve only 5% of their operations by contrast, our range extender solution would be sufficient to meet 95% so their operational needs.
Our solution requires no new infrastructure. This is a critically important consideration for many fleets several of the event participants shared similar stories about how they could find locations that could service only a handful of plug in trucks and how most of them would need significant grid upgrades or that power just wasn't available.
Bolt to handle a new fleet of BD plug ins.
One of the fleets that had been building a new terminal have been told by its utility provider that there was enough power available to support electric trucks only after completion of the new terminal did they learned that the additional capacity had already been claimed by other companies as a result, they are only able to deploy a small number of.
Rick trucks.
Lastly in the one we probably underestimated the most is the value of Archrock as a tool for recruiting and retaining top drivers. There is a massive shortage of drivers in the industry and fleets are looking for competitive ways to attract the next generation of talent, having a high tech instant torque and quiet truck can be a huge advantage.
In that regard as.
As such we remain confident in our technology and its overall market potential and we anticipate that fleets will adopt in various ways certain fleets may place initial orders for smaller quantities of units as they test various technology solutions, while others will start with larger orders.
Last quarter, we laid out the critical milestones for 2022 that we intend to accomplish as we move towards the start of production on our hyper truck <unk>.
Turning to slide seven as we look at the next milestone we are taking all the learnings from our initial demo units and have begun building our design verification development vehicles.
We are on track to complete the first unit this quarter.
We expect to build at least 10 more unit to further test and validate before we begin production validation.
The initial in field testing will be done in controlled fleet trials here in Texas, which will allow us to closely monitor truck performance.
I am pleased to share that we are still on track to achieve these milestones. According to the 2022 timeline, we presented in our last earnings call.
Looking ahead, we plan to build at least 20 more units in the first half of 2023 to be used for the completion of our product validation and for continued fleet trials.
At the same time, we will seek final certification from carb, the EPA and Nitza.
This will put us on track for commencing production in late 2023 of the hyper Truckee Rx.
Now shifting to an update on our hybrid <unk> product.
As you are no doubt well aware the automotive industry continues to be gripped by global supply chain disruptions shortages of certain components, including wiring harnesses in sheet metal led to longer than expected delivery times as a result, some hybrid <unk> deliveries originally scheduled for Q4 have been pushed into the <unk>.
Current quarter.
Nonetheless, we continue to work closely with our partners to secure the components, we need to fulfill our anticipated sales orders for 2022.
As we discussed on our November earnings call, we've seen significant changes in the competitive landscape within the class eight truck market over the past quarter, we took the opportunity to speak with fleets about how they view the evolution of electrification technology.
In light of the number of companies focused on fully electric product offerings, we believe the market opportunity for our hybrid <unk> product, how does that reduced given the anticipation of other fully electric products coming to market in the near term.
Many have told us that they expect fully electric vehicles to become prominent in the next few years and that they plan to wait for these products such as plug in electric trucks or a range extender electric trucks like the hyper Truckee Rx.
While some fleets don't see hybridization as a large enough step towards electrification, we still have other fleets requesting the product and therefore will continue to offer the hybrid <unk> to meet their particular needs.
As a reminder, our hypertrophic <unk> use case is focused on line haul applications, meaning hundreds of miles per day up to 1000 miles before needing to refuel that compares with current EV solutions that satisfy a use case of only 100 to 200 miles.
As I noted earlier, we continue to strengthen the highly on team earlier. This month, we announced the addition of Jay Craig to our board of Directors J is a recognized and respected leader in the commercial vehicle space and was previously the chairman and CEO of Meritor at.
At Meritor, he oversaw the company's product portfolio and the development of a number of electrification products. Some of which are now used in our hybrid truck <unk>. We are excited to have Jay with us and we'll certainly benefit from his experience in leading a global drivetrain company into the electrification space.
As we embark on our longer term vision for highly on we continuously assess the landscape and opportunity to create shareholder value. While the majority of our organization is focused on commercializing our existing product roadmap, we see significant opportunities to expand our offerings into future products and adjacencies.
Yes.
To that end I am pleased to announce that sharing Lance will soon be joining our team as chief strategy Officer.
Sure he comes to us with over 20 years of experience in the automotive industry, including leading strategy for both GE connectivity and meritor.
Her wealth of industry knowledge is a fantastic fit for highly on growth opportunities and I'm thrilled to have her joining our team.
Sure will lead the business efforts to bring our hyper truck fuel agnostic and hydrogen fuel cell solution to life and explore opportunities for advanced software solution I look forward to sharing updates on these initiatives in the coming quarters.
As we previously discussed we have designed our hyper truck product platform to be generator agnostic. Our roadmap includes fuel ignostic and fuel cell generators for the next iterations of the product in talking with fleet operators. We believe hydrogen will begin in regional applications, where a single fueling station can be.
<unk>.
While the hyper truck <unk>, which is powered by natural gas and renewable natural gas is viable today for long haul applications highly on is well positioned to evolve with the market into hydrogen solutions as the fueling infrastructure is built.
I am pleased to share that we have already begun efforts on both fuel agnostic and hydrogen fuel cell solution. These two solutions will be subsequent releases once we launched the hyper truck <unk> we.
We believe that these options will enable fleets to expand their electrification adoption as the transportation sector and infrastructure evolve.
In terms of business development, we have expanded our sales team with the addition of four trucking industry veterans, who collectively bring more than 50 years of experience in trucking sales as highlighted today, we are seeing great responses from fleets to the hyper Truckee Rx and this team will be sharing the technology with fleets all across the country.
Our proprietary software solutions, our primary competitive differentiator and have the potential for additional product and revenue streams for now our primary focus continues to be getting our first hypertrophy Rx units on the road as quickly and safely as possible.
Looking ahead, we will move aggressively with our commercialization and business development plan to build on the momentum we have established and the positive feedback we're hearing from customers.
We expect that 2022 will be an exciting year for highly on in terms of product development milestone and garnering commitments from additional fleets as we brought in our technology solutions to address the transportation sectors environmental impact with that I will turn the call over to Sherry. Thank.
Thank you Thomas and good morning, everyone I will now review, our financial highlights from the fourth quarter and full year.
As Thomas mentioned in the fourth quarter, we began recognizing revenue on our hybrid powertrain solution and we recorded $200000 in revenue we continue to invest in R&D in support of our product development roadmap.
In the fourth quarter, R&D spending was $17 4 million down 800000 sequentially and $12 $9 million year over year.
For the full year 2021, R&D spending totaled $58 3 million compared with $12 6 million in 2020.
SG&A spend which included the expansion of key infrastructure for our commercialization initiatives and operations was $9 2 million in the fourth quarter up 500000 sequentially and up $3 $3 million year over year.
For the full year 2021, SG&A spend totaled $35 3 million compared with $9 6 million in 2020.
Operating expenses for the full year 2021 totaled $93 6 million compared with $22 2 million in 2020, as our product development and company expansion gained momentum.
Overall highly on reported a net loss from operations at $29 1 million for the fourth quarter compared with a net loss from operations of $26 8 million in Q3, and a net loss from operations of $10 3 million in Q4 of 2020 for the full year 2021, the company reported a net loss from.
<unk> of $96 1 million compared with $22 2 million in 2020.
Turning to the balance sheet, we ended the fourth quarter with over $557 million available to fund our commercialization plans for both the hybrid E X and the hyper truck Air X. This figure includes $258 4 million in cash and cash equivalents $118.
The $8 million in short term investments and $182 million and long term investments are.
Our short term and long term investments are high quality credit instruments with no maturities beyond.
36 months and a weighted average maturity of 14 months across our portfolio.
Our long term investments are designed to preserve capital, while providing liquidity to meet the company's operating requirement.
Turning to our revenue in the range of $2 million to $3 million in hybrid <unk> sales. The actual end use case of the trucks that we installed the hybrid <unk> system and we.
We expect full year operating expenses to be between $135 million and $145 million driven primarily by an increase in R&D cost to support commercialization of the hyper truck.
And 2022, we expect to remain well capitalized at a key development milestones we discussed on today's call.
With that we will open the call to Q&A.
Operator, Please go ahead.
Yeah.
Ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from Vicky. Please press the pound key.
Our first question.
From Joseph Shepherd with Cantor Fitzgerald.
Hey, good morning, guys congrats on the quarter.
Good morning, Andrew.
Couple of quick questions for me so regarding the the order for the 100 units, which are backed by deposits does that mean that these are.
Final and simply when when can you give us a sense of when roughly you expect to recognize revenue for these I mean, my guess is that going to be ramping ramping up it's not going to be 100, and say one quarter. So any color you can provide there.
Then we can have the confidence to go ahead and procure all the parts needed in order to to assemble these vehicles. So.
You are correct, though in terms of how these will actually rollout.
On the call we plan on starting production and in the <unk>.
Latter part of 'twenty, three and we've made commitments with these fleets that we would have all of the <unk>.
Units delivered back to them by the first quarter by the end of the first quarter in 2004.
First of all Okay got it that's very helpful. Thank you and maybe one follow up.
On the guidance you provided of $2 million to $3 million for 2022.
Can you are you able to give us any sense of what that translates roughly in terms of.
Of the units.
Hybrid units.
Yes. Thank you for that question. So we expect that we will be shipping over 100 units and the reason why we're focusing more on revenue as opposed to <unk>, because we really have two different use cases one.
It depends on whether or not it's a new install or a retrofit.
And it's also based on the type of truck. So we're confident based off of the inbound interest that we have currently that we're going to be able to achieve that $2 million to $3 million, but it's more about that blended average, which currently is a little bit heavier on the retrofit side versus the new install.
Got it that's very helpful. Thanks, Congrats again.
Thank you.
Our next question is from.
Steven Fisher with UBS.
Great. Thanks, good morning.
Just to follow up on the timing of the hyper truck deliveries.
I presume.
Late 'twenty three means Q4.
I'm just wondering if youre thinking sort of late in the quarter and then I guess are those 100 units that you plan for those.
Q4, and Q1 of the subsequent year.
Is that kind of all you are thinking about for those two quarters or could.
Some of those other 325 reservations still.
It will make it into into that time period for some time in 'twenty three and early part of 'twenty four.
Yes, so as we said late 'twenty three.
Q4 is correct, but I wouldn't say that that implies at the end of Q4 of 2003. Our goal is <unk>, we will actually start ramping up start deliveries as mentioned the commitment to the fleets is that all of those vehicles.
Those would be delivered back to them by the first quarter of.
24, but we're not saying that that would be all the units would be able to do during that.
Time.
We're really viewing this as the initial ramp up and one of our goals as we go through these ride and drive events. So we've been mentioning is not only to secure these orders, but also to build the backlog in reservation and then as that backlog.
The reservations is building then we will start converting those into orders with confirm production slots, which you saw with these 100 trucks. So we plan to continue to do that over the months and quarters ahead and then.
To start delivering those in Q4 of 'twenty three.
Okay, Great and then given your comments about the competitive landscape on the hybrids I'm just wondering how we should be modeling that as we think over the next few years.
Would you think maybe a ramp up in 'twenty, three and maybe again in 'twenty four before coming down in 2005 has some of those alternative electric only trucks really start to make their way into the market.
And if so is that sort of a ramp down do you think some of the new products and services.
Sure Lance is going to be kind of bring on whats the timing of the ramp up of some of those to maybe mitigate.
Potential downturn in the hybrid.
Sure. So on the last earnings call. We had mentioned with the hybrid product, we're going to be kind of analyzing what we saw the addressable market being.
Did that over this past quarter over on the last earnings call. We had noted the announcement of the 15 liter natural gas engine.
We had forecast, though we did see that impacting market demand as well as.
The discussions with these ride and drive it was great to hear from fleets and really get their feedback, but what we heard was fleets want full electric vehicles, now whether that BBB plug and local delivery type vehicles or electric range extender vehicles like the hyper truck <unk> or either gen fuel cell vehicle. So we do.
We expect that the market is going to shift more towards full electric vehicles like those solutions like the hypertrophy Rx and the hybrid is going to be more of a start into electrification, but it's not the end all be all like these full electric vehicles will be.
And then in terms of sharing Lance we're super thrilled to have her joining the team as we mentioned she is going to be really driving the business efforts on the fuel agnostic and fuel cell solutions and we want to make sure that people understand that we view those as a very critical part of our story, while we're starting with the hyper truck <unk> and natural gas solution today.
And we want to make sure we are future proofed into hydrogen and hydrogen becomes available that our powertrain is a logical solution to use because we will already have millions of millions of miles deployed on natural gas to then be able to use in hydrogen and we see hydrogen starting with kind of local delivery type applications versus we see the hyper truck <unk>.
Starting with more long haul applications up to 1000 miles in between <unk> and I think no. One can really tell when hydrogen is going to happen you know theres a lot of development going towards it but it is a technology that a lot of infrastructure still needs to be built out in order to get there to make it a true long haul solution. So sherry will be driving.
Those we have already kicked off developments on both of those ends on the fuel agnostic and fuel cell side, which we plan to share more on as we go through this year.
Great and then lastly, wondering what you think about the impact of the Cummins acquisition of Meritor and what that could mean for highly on I guess, both from a from a competitive perspective, but also on the flip side, perhaps there is some opportunity that you could work more collaboratively with Cummins given the increasingly becoming an important part of your <unk>.
Apply chain.
Sure. So we're obviously excited for meritor to see the the acquisition come through what comments.
Sequencers that we did have discussions with Cummins about does this have any impact of the supply chain for highly on and we were assured that it would not then we would have continuity of supply on those axles and continue on the relationship as we add established so we don't see any threat to the business plan at <unk>.
This stage from a supply chain standpoint, and then with comments, we've got a strong collaborative work with and working relationship with them and we continue to plan to carry that forward.
And it's exciting to see that now.
We will be sourcing axles from them as well.
Terrific best of luck. Thanks.
Thank you.
Our next question is from Jason <unk> with Barclays.
Oh, hi, its Brian its Brian Johnson on with Jason.
In terms of the.
Spacs, we're very focused on cash in the bank versus spend rates. So you talked about 135% to $45 million of Opex. This year when does capex.
Need to ramp up and then how tightly will that capex be require tied to firm orders as opposed to.
Build it and they will come kind of capacity.
Yeah. So great Great question, and first I would like to just remind everyone that we really have an asset light approach. So capex spend for assets is a very minor spend and this year, we expect really to be in the range of call it $10 million to $20 million and Thats really more focused on that facility expansion and the bill.
<unk> out of our Cath lab, which should be more onetime in nature and specific to 2022. So going forward you shouldn't see a significant amount of investment on the Capex side, we will be doing a low volume installations here in Austin.
We're ramping up the ear X, but then we still have the ability to do installations start growing at Mont centers, and then with the ultimate goal that we will be on the OEM line. So low volume on the Capex side, but also as youre thinking about it from a liquidity perspective very important that it's not just looked at from a cash and cash equivalents person.
Dave but you also have to include the short term and long term investments, which as we said ended the year really close to $560 million. So we feel that we are very well positioned to get through all of the commercial milestones that we talked about today.
Okay and so.
When I look at that means cash could easily last well into 'twenty one through 'twenty three when theyre getting these milestones.
Exactly.
Okay, and then would you need to raise more cash towards the tail end of that what the milestones under your belt or is there a point.
It gets if it gets to my second question, how are you thinking about cash flow breakeven for the business.
So we currently do not anticipate that we're going to have to raise any additional tons right now it will it will also be dependent on what the ramp up of the hypertrophic, Arizona. There. We're incredibly encouraged by the recent order announcements and the feedback that we've been receiving from other fleets. So far so looking forward to hopefully announcing more.
Orders in the near future, but we do not expect to have to raise any additional capital at this time.
Thank you.
Yes.
Our next question is from Mark Delaney with Goldman Sachs.
Yes. Thank you very much for taking my questions first on the orders versus the reservation and some of the differences. There I think thank you for all the color you provided on that topic already.
A little bit more is will be to learn on that front. So for an order you mentioned deposits are required maybe you could.
How.
How larger deposits as needed in order to put an order down and also our orders are those binding or is that one of the differences versus a reservation or kick in orders there will be canceled.
Yeah, Great question. So the deposits are in the thousands of dollars per unit that are being ordered and so we see this as a pretty substantive amount that fleets are putting down to commit to these production slots and I think that's the big difference is with the orders that fleets are confirming their actual build slots.
Conventional in the industry when a fleet goes to buy a new truck they confirm a build slot that is what we are doing as well. We are adopting that same process reservations are more fleets indication and commitment to this is how many they see they could adopt in the years ahead, but we're not actually <unk>.
<unk> build slots for them with the reservation. So that's really the differentiator with the orders and as mentioned in one of the previous calls going forward. We plan to both expand the number of orders we have to confirm those production slots. So that as we go into production, we're really building to a backlog of build slots and then the reservations we plan.
To grow to continue to show the level of interest that we're receiving from fleets and the hyper truck.
Got it that's helpful. Thank.
Thank you my question was on the Opex and it came in under guidance and is hoping for some more color.
Was that all timing related and these expenses will show up in 'twenty, two and Thats part of the 22 outlook or was there some efficiencies that the company is founded on the spending.
It was exactly what you said it was more timing than anything else really related to just the number of installs that we completed in Q4 versus Q1 as well as the timing of some of the truck purchases.
We are procuring to complete the next phase of our development on the hypertrophy. So those expenses are already embedded in the guidance that we provided today.
Okay.
Lastly from me just on the hybrid program.
The company's focus is on other products.
To be clear are you expecting more growth in things like the ER accurate rather than the hybrid.
The outlook for $2 million to $3 million of sales in the hybrid this year, maybe talk about the ROI to support that program.
I might just pretty limited profitability, if any non <unk> 3 billion of sales though.
Trying to think through how you guys are thinking about the investment itself to still support the hybrid program. It is it worthwhile, but relative to the longer term about what youre thinking for that product line. Thank you.
Sure. So I think the view that we've had on it is the learnings from deploying these solutions out there getting them and <unk> actually recognized in revenue out of our huge milestones for the company and learnings that are going to carryover to when we launched the hybrid <unk> as well and so with the deployment of these we have the customer interest there too.
Go ahead, and deploy the $2 million to $3 million. This year, we have a high confidence level on that end and we want to take that as an opportunity to also really run through.
The learnings of kind of growing and scaling the company having.
The things like actually recognize revenue service capabilities in place interacting with the customers and it's also one of the big things is having units deployed out in the field traveling millions of miles.
There's learnings that come from that and reliability. So for instance, I'll give you. One example to it.
With our hybrid product we created wire.
Wiring specifications I know this sounds like a minor detail, but wiring specifications of how the product needs to be built in order to be robust enough to last in the class eight commercial vehicle space. We're now able to carry those exact specifications over and deploy that with the hyper truck products. So that when we go ahead and launch the hyper trucks, we have a high confidence in the reliability of that system.
Understood. Thank you.
Again, if you have a question at this time. Please press the Star then the number one key on your Touchtone telephone.
Our next question is from Noel Parks with Tuohy brothers.
Hi, good morning.
Good morning Noah.
Just a couple of things.
You've mentioned.
Controlled trials right.
Got.
Have underway.
I'm just wondering.
Could you sort of.
Maybe sort of break out some of the Scott and.
And milestones.
Sure.
Customer evaluation process.
Yeah, a little bit confusing because there are customers that are sort of involved at the pre commitment.
Piloting or testing out there.
The vehicles.
One is that once they are signed customers theyre involved in compounding so.
You could maybe just sort of.
With that that would be helpful.
Sure. So let me start with the kind of the progression from where we are now to the start of production on the customer base and then we can talk about fleets level of commitment that they're making so the first is where we're at today as we're doing the ride and drive events that we had mentioned so this is really the fleets first opportunity to get in the vehicle experience that themselves.
Some of the fleets actually a lot of fleets that have come in and experience that are also bringing drivers from their operations along with them. So that they can give their true and honest feedback.
And it's been a very very successful a couple of months in and interacting with fleets on that end and thats, thus, where youre seeing fleets starting to make those commitments as we mentioned on the last earnings call and followed up on this one we are on track to do controlled fleet deployments of the hyper truck and fleet operations later in 2022, so that will.
Actually be moving.
Goods and trailers of our customers obviously, it's we're mentioning.
Let them actually run the trucks in their operations. We will then continue those trials into 2023, and then we will finalize our certifications with carb EPA and Thats and then that will put us on track to be able to start production of the hybrid truck in late 'twenty three so in terms of kind of.
The fleet's level of comfort with actually going ahead and placing orders.
<unk> based on what our fleets normal adoption cycle is for our new technologies. Some fleets are going to start with one or two units just to really be able to run it in their operations analyze how it performs and then grow from there others are willing to make larger commitments right from the start which we're seeing with the 100 units that were ordered across the.
So we mentioned today. So it is expected that we're going to see varying levels of orders from fleets and I don't think that that shouldn't be read into a kind of a level of fleets interest in the technology. It's more just what's their adoption cycle of how they bring new technology into their operations and ultimately our goal is to be there.
Train of choice in the years ahead as they continue to buy more and more trucks.
Okay.
Great Thanks, and just.
One housekeeping question and I apologize if you touched on this already but.
The fourth quarter and look for the year your operating expense came in.
Pretty decently below the.
The piece.
I expected from here.
The last revision to that.
To your expectations for that number. So can you just maybe talk a little bit about.
What.
The gap was.
I'm not complaining manage is never bad really to see comp.
Longer than expected, but just some insight on that.
Sure. It was really just strictly a timing issue really related to the number of installations that we did in Q4 versus our initial expectations, but we expect to complete all of those by Q1. So those are all embedded in the guidance as well as system timing of purchases that we need and what we're anticipating for than that.
<unk> phase of the build out of our samples so more timing than anything else, but already embedded into the guidance that we gave you today.
And then just one more on timing.
In the release and mentioned today.
Additives for trucking industry veterans to your sales force and just curious about the spending coming on.
Was any of the expense for them.
Embedded in.
Entirely in 2022.
There was a very small amount that was embedded in Q4. It is primarily in Q1.
Okay, Okay, great. Thanks, a lot.
You bet. Thank you.
Our next question is from Bill Peterson with Jpmorgan.
Hi, good morning, and thanks for taking the questions.
I was hoping to go into a little bit more detail on I guess, the recent roadshow feedback you've discussed it a little bit, but I guess can you provide some specific examples on some of the feedback that you've received that you are applying here to the work here in 2022 any hurdle issues cover uncovered.
Better leading to some additional things that youre going to work through this year.
Sure. So one that we saw as a huge positive was one of the goals of the hydro truck innovation Council members than other fleets are bringing in is we expect that obviously to our operating other alternative fuel vehicles as well and so one of the really interesting pieces of feedback was that a couple of the fleets actually operate.
The early deployment vehicles in their operation and they were commenting to us about just how well the integration was done in Archrock and how smooth our truck was compared to some of the other electric vehicles that they are trying out so that was obviously a big positive.
So just to give you a very nitpicky, one like we had a fleet in general is wearing bifocals and where we mounted our screen in the truck.
So theres bifocals, so it's like that level of feedback that now we're taking that and we're adjusting where we actually amount the screen inside the vehicle. So it's a wide range of feedback that we're getting but it's so much better to know that now as opposed to when we actually are in the starting of production phase in 'twenty three so.
Great feedback thus far from fleets.
I guess maybe.
So the innovation Calix will you have a number of members and that wegmans in Florida.
I think this company you talked about here.
Last year.
But I guess the initial.
Sure.
On the status of some of the pilots with the innovation Council and why they are not showing kind of up in the reservation or order book.
Yes, great question and timing is impeccable just yesterday actually.
Yesterday afternoon, we received an order from one of our innovation Council members for the hyper trucking. So we plan on on showcasing that in the days ahead and sharing a little bit more details, but the level of engagement from the innovation Council has been very strong, but we don't see this as a technology thats just going to be for those fleets, we see it as.
A great solution for other fleets as well so stay tuned for that update on on some follow on the last question for me is obviously supply constraints are pretty prevalent still.
It doesn't it seems like you're kind of reiterating order your timing and not delaying it but I guess I'm just curious.
You mentioned before like trucks are I think more than 12 months lead time wanted to see if that's still the case any improvement there or if it's even gotten worse and then other areas like semiconductors batteries.
Confirming you have everything you need to meet your 2020 milestones, but more importantly, what are you keeping your eye out are really trying to ensure you have in place such that you can begin your ramp in 2023, the latter half of 2023.
Sure. So we definitely still see that there are supply chain hurdles out there across the industry not unique to highly on but as we had leaned in a little on our last call and just to reconfirm. It on this call that we have confirmed production delivery slots from our suppliers.
That meet the timelines that we've laid out on the last call and on this call. So we are confident in those.
I think one of the big things. We highlighted was just the backlog of trucks. As you were mentioning this has a carryon effect to both the hybrid and the <unk>. The <unk>, we need these trucks for development purposes for the hybrids and Thats one of the reasons that you saw some of our deliveries of hybrid shift from Q4 into Q1 of this year was just because fleets.
Who are waiting receiving the trucks from the Oems.
But once again to reiterate it we have we have strong confidence that we've got the.
The supplies, we need for 2022 parts and trucks all the above to be.
Okay the execution here.
Thank you.
I am showing no further questions at this time I will now turn the call over to Thomas <unk> founder and CEO of <unk>.
Remarks. Please go ahead Sir.
Okay.
Well. Thank you everyone for joining the call today is a very exciting quarter for us great to see the level of interest from fleets.
Fleets in the hyper truck products, starting to be confirmed with orders and additional reservations as well as the growth of both our board and our team here at highly on and we look forward to a very exciting 2022 and connecting again on the next earnings call. Thank you.
Ladies and gentlemen. This concludes today's conference call. Thank you again for your participation and have a wonderful day you may now disconnect.
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