Q1 2024 Hyzon Motors Inc Earnings Call

Krista: Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hyzon first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by my name is Christa and I will be your conference operator today at this time I would like to welcome everyone to the higher than first quarter 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer.

First question, if you would like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question again press Star One I will now turn the conference over to Tom Cook, Managing director with ICR. Tom You May begin your conference.

Krista: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star one. I will now turn the conference over to Tom Cook, Managing Director of ICR. Tom, you may begin your presentation.

Tom Cook: Thank you, operator. And good afternoon, everyone.

Tom Cook: Thank you operator, and good afternoon, everyone. Welcome to <unk> first quarter 2024 earnings call with me on the call today are partner mix, Chief Executive Officer, and Steve Weiland, Chief Financial Officer.

Speaker Change: As a reminder, you can find a press release detailing our financial results and the presentation accompanying today's call in the Investor Relations section of our website.

Tom Cook: Welcome to Hyzon's first quarter 2024 earnings call. With me on the call today are Parker Meeks, Chief Executive Officer, and Steve Weiland, Chief Financial Officer. As a reminder, you can find a press release detailing our financial results and the presentation accompanying today's call in the investor relations section of our website. Today's discussions include four forward-looking statements regarding future plans and expectations. Actual results might differ materially from those stated, and factors that could cause actual results to differ are explained in the four forward-looking statements at the end of the press release and on page two of our earnings presentation. Forward-looking statements speak only as of the date on which they are made. You are cautioned not to put undue reliance on forward-looking statements. With that, I'll turn the call over to our CEO, Parker Meeks.

Speaker Change: Today's discussions include forward looking statements regarding future plans and expectations.

Speaker Change: Actual results might differ materially from those stated and factors that could cause actual results to differ are explained in the forward looking statements at the end of the press release on page two of our earnings presentation.

Speaker Change: Forward looking statements speak only as of the date on which they are made and you are cautioned not to put undue reliance on forward looking statements.

Parker Stewart Meeks: That I will turn the call over to our CEO Parker mix.

Parker Stewart Meeks: Good afternoon, everyone. And thank you for joining us in our first quarter of 2024. I am pleased to share our financial results and progress made during the quarter, a quarter in which Hyzon is proud to have built upon the commercial and technology inflection points we initiated in 2023 as a leader in hydrogen mobility. I'll start with a brief recap of our results before providing more color on our commercial updates, technology manufacturing, and demand advice. Steve will then review our financials in more detail. We recognize first quarter 2024 revenue of $10 million, compared to no revenue in the comparable prior year period.

Parker: Good afternoon, everyone and thank you for joining our first quarter of 2024 earnings call.

Parker Stewart Meeks: I am pleased to share our financial results and progress made during the quarter with you.

Parker Stewart Meeks: A quarter in which high vol is proud to have built upon the commercial and technology inflection points, we initiated 2023.

Parker Stewart Meeks: A leader in the hydrogen mobility ecosystem.

Parker Stewart Meeks: I'll start with a brief recap of our results before providing more color on our commercial update technology manufacturing and demand environment.

Parker Stewart Meeks: Steve will then review our financials in more detail.

Parker Stewart Meeks: We recognized first quarter of 2020 for revenue of $10 million compared to no revenue in the comparable prior year period.

Parker Stewart Meeks: This revenue was primarily driven by customer acceptance of 10 coach buses deployed to Fortescue Metals Group in Australia last year, completing the commercial cycle we have described on previous calls.

Parker Stewart Meeks: This revenue was primarily driven by customer acceptance of 10 coach buses deployed to Fortescue metals group in Australia last year.

Parker Stewart Meeks: <unk> the commercial cycle, we have described on previous calls.

Parker Stewart Meeks: File.

Parker Stewart Meeks: Contract, Deliver, and Accept, with scale as the targeted next phase of the commercial cycle with our customers. We do want to remind investors that we expect lumpiness in our revenue recognition in the near term. As the majority of our commercial agreements have some form of risk, such as a buyback guarantee, which impacts the timing and treatment of revenue breaks.

Parker Stewart Meeks: Contract deliver.

Parker Stewart Meeks: With scale as the targeted next phase of the commercial cycle with our customers.

Parker Stewart Meeks: We do want to remind investors that we expect lumpiness in our revenue recognition in the near term as.

Parker Stewart Meeks: As the majority of our commercial agreements have some form of risk share such as the buyback guarantee.

Parker Stewart Meeks: Which impact timing and treatment of revenue recognition.

Parker Stewart Meeks: From a balance sheet and capital perspective, we delivered another quarter of improved net cash. Excluding the impacts of our first SEC settlement payments and the proceeds from the sale of our Rochester facility, as compared to prior guidance for the court. This reflects our continued focus on cost control, which Steve will comment on further. Additionally, we have continued to advance our capital rate, working with a financial advisor on potential investment and strategic alternatives to support our commercialization with a focus on strategic investors, as we have previously discussed.

Parker Stewart Meeks: From a balance sheet and capital perspective, we delivered another quarter of improved net cash burn excluding the impacts of our first FCC settlement payments and the proceeds from the sale of our Rochester facility.

Parker Stewart Meeks: More to prior guidance for the quarter.

Parker Stewart Meeks: This reflects our continued focus on cost control, which Steve will comment talk further.

Parker Stewart Meeks: Additionally, we are continuing to advance our capital raise working with the financial advisor on potential investment and strategic alternatives.

Parker Stewart Meeks: Port our commercialization with a focus on strategic investors as we have previously discussed.

Parker Stewart Meeks: Importantly, Hyzon continues to progress as a technology leader in the global transition to clean energy. Our proprietary, high-power, zero-emission fuel cell technology is reducing emissions from heavy-duty trucking today. As the hydrogen ecosystem grows, we see opportunities to deploy our existing and future generation fields of technology to decarbonize heavy-duty industrial applications, such as Rail, Mining, Aviation, and Stationary Power. We believe 2024 will show Hyzon continues to lead in the commercialization of our technology, which our progress this quarter supports.

Parker Stewart Meeks: Importantly, <unk> continues to progress as a technology leader in the <unk>.

Parker Stewart Meeks: Transition to clean energy.

Parker Stewart Meeks: Rytary high power zero emission fuel cell technology is reducing emissions from heavy duty trucking today.

Parker Stewart Meeks: As the hydrogen ecosystem grows we see opportunities to deploy our existing and future generation fuel cell technology to decarbonize heavy duty industrial applications, such as rail mining.

Parker Stewart Meeks: Asian and stationary power in the future.

Parker Stewart Meeks: We believe 2024 will show high <unk> continues to lead the commercialization of our technology, which our progress this quarter supports.

I would like to take a few minutes to describe that now.

Parker Stewart Meeks: Beginning on the commercial side, earlier this year, Performance Food Group, or PFG, put into operation their first four Hyzon fuel cell electric vehicles and marked a significant step toward decarbonization goals shared by PFG, Hyzon, and the state of California. Now, with several months completed, we continue to expand our on-road experience through real-world commercial operations. Since the last week of January, the PFG fleet has made more than 1,575 deliveries and traveled nearly 23,000 miles, with approximately 2,900 total operating. Their trucks have been able to travel further and refuel quicker than other zero-emission alternatives, reducing harmful emissions and bringing value to their operations.

Parker Stewart Meeks: Beginning on the commercial side earlier this year performance food group, our PFG put into operation. There first four highs on fuel cell electric vehicles and marks a significant step towards the carbonization goals shared by PS.

Parker Stewart Meeks: Hi, Don and the state of California.

Parker Stewart Meeks: Now with several months completed we continue to expand our online experience through real world commercial operations.

Parker Stewart Meeks: Since the last week of January the PFT fleet has made more than 1575 deliveries.

Parker Stewart Meeks: I travelled nearly 23000 miles with approximately 2900 total operating hours.

Parker Stewart Meeks: Their trucks have been able to travel further and refuel quicker than other zero emission alternatives, while reducing harmful emissions and bringing value to their operations.

Parker Stewart Meeks: This intelligence will help us optimize our technology while working simultaneously to develop the next generation 200 kilowatt fuel cell. We expect to continue to work with PFG on an agreement for 15 200 kilowatt fuel cell trucks, following a successful upcoming 200 kilowatt truck trial and a possible option to purchase an additional 30 fuel cell electric vehicles. PFG represents exactly the kind of large-sleeve customer profile and commercial agreement structure, scaling over multiple years, that we are focused on in 2020.

Parker Stewart Meeks: This intelligence will help us optimize our technology, while working simultaneously to develop the next generation 200 kilowatt fuel cell system.

Parker Stewart Meeks: We expect to continue to work with PFG on an agreement for 15 200 kilowatt fuel cell trucks following.

Parker Stewart Meeks: Following a successful upcoming 200 kilowatt truck trial.

Parker Stewart Meeks: Hospital option to purchase an additional 30 fuel cell electric trucks.

Parker Stewart Meeks: PFG represents exactly the kind of largely customer profile and commercial agreement structure scaling over multiple years.

Parker Stewart Meeks: We are focused on in 2024.

Parker Stewart Meeks: As we have described before, this approach starts with a customer trial, which, if successful, leads to a pilot order of typically 5 to 10 vehicles, with the option for larger orders in the future, over 3 to 4 tranches, charting 100 trucks per year from each large fleet over time. The vehicles are deployed to the customer, which formally accepts them into operations, at which point Hyzon begins to recognize revenue depending on the commercial, completing that commercial cycle and assuming success with scale to follow.

Parker Stewart Meeks: As we have described before this approach starts with the customer trial, which is successful with still a pilot order are typically five to 10 vehicles with the option for larger orders in the future over three to four charges, turning 100 trucks per year from each large fleet over time.

Parker Stewart Meeks: The vehicles are deployed to the customer, which formulaic substandard operations at which point highs on begins to recognize revenue depending on the commercial terms.

Parker Stewart Meeks: Cleaning that commercial cycle, and assuming success with scale to follow.

Parker Stewart Meeks: This approach also applies to a refuse truck platform. Last week at Waste Expo, we launched the first fuel cell electric refuse truck for the U.S. market with NewWay Trucks, the largest private refuse equipment manufacturer in North America. We also announced our Customer Trial Program, which will launch with Recology this summer.

Parker Stewart Meeks: This approach also applies to our refuse truck platform.

Last week at waste Expo, we lost the first fuel cell electric refuse trucks for the U S market with new way trucks.

Parker Stewart Meeks: <unk> private refuse equipment manufacturer in North America.

Parker Stewart Meeks: We also announced our customer trial program, which will launch with <unk>. This summer.

Parker Stewart Meeks: Hyzon accelerated this vehicle development because of the strong operational performance demonstrated by our Australian refuse truck over a four-month customer trial near Sydney in challenging route conditions, including up to 18%. The Australian vehicle delivered full-day route performance in line with its combustion engine equivalents without needing to refuel, and in some cases, even doubled the daily work rate of a comparable battery electric refrigerator.

Parker Stewart Meeks: I Wanna accelerated this vehicle development.

Parker Stewart Meeks: The strong operational performance demonstrated by our Australian refuse truck over a four month customer trial near Sydney, a challenging rock conditions, including up to 18% grades.

Parker Stewart Meeks: The Australian vehicle delivered full day rail performance in line with its combustion engine equivalents without needing to refuel.

Parker Stewart Meeks: In some cases, even double the daily work rate of a comparable battery electric refuse truck.

Parker Stewart Meeks: That significant performance gap proves, in our view, that only fuel-to-electric powertrains can effectively decarbonize refuse collection. We are excited to bring this global zero-emission platform to North America, and the response from customers so far has been overwhelmingly positive.

Parker Stewart Meeks: The significant performance gap proves and our view that only fuel cell electric powertrains can effectively decarbonize refuse collection.

Parker Stewart Meeks: We are excited to bring this global <unk> platform to North America.

Parker Stewart Meeks: The response from customers so far has been overwhelmingly positive.

Parker Stewart Meeks: Highlighting the market demand for the product, with a nearly full trial schedule starting this summer. Looking to the balance of the year, we currently have nine refuge truck trials, either scheduled or in final scheduling, beginning in the summer, including with many of the largest refuse fleets in North America, subject to successful trials.

Parker Stewart Meeks: Highlighting the market demand for the product.

Parker Stewart Meeks: With a nearly full trial schedule starting this summer.

Parker Stewart Meeks: Looking to the balance of the year. We currently have nine refuse truck trials, either scheduled or a final scheduling beginning in the summer.

Parker Stewart Meeks: Including with many of the largest refuse fleets in North America.

Parker Stewart Meeks: Subject to a successful trials, we expect to enter into initial definitive commercial agreements in the second half of 2024. Thank.

Parker Stewart Meeks: We expect to enter into initial definitive commercial agreements in the second half of 2024, and Commercial Deliveries to begin in 2020. During the first quarter, Hyzon Australia successfully concluded the four-month refuge truck trial with Vermontus, which I just mentioned. The vehicle met its performance targets, and so, as previously discussed, the commercial truck converted to a full vehicle. We're in discussions with Vermonters about potential additional vehicle orders. Finally, during the quarter, we delivered one truck to a Dreds customer at the ports of Los Angeles and Long Beach.

Parker Stewart Meeks: In commercial deliveries to begin in 2025.

Parker Stewart Meeks: During the first quarter Hasnt, Australia successfully concluded the four months revenue struck trial with remind us which I just mentioned the.

Parker Stewart Meeks: The vehicle that is performance targets and so as previously discussed the commercial trial converted to a full vehicle purchase.

We are in discussions with reminders about potential additional vehicle orders.

Parker Stewart Meeks: Finally during the quarter, we delivered one truck to address customer at the ports of Los Angeles and long Beach are second truck delivered into drayage and the largest port Drayage fleet in the U S.

Parker Stewart Meeks: Our second truck was delivered to Dreyage, the largest port delivery fleet in the U.S. Supporting our success are strong tailwinds worldwide for hydrogen and zero-emission vehicles. In the U.S., for instance, support continues to expand. In addition to the administration's $7 billion Hydrogen Hub program, the Inflation Reduction Act earmarks $2.6 billion for the EPA's Clean Ports Program.

Parker Stewart Meeks: Supporting our success, our strong tailwind worldwide for hydrogen and zero emission vehicles.

Parker Stewart Meeks: In the U S. For instance support continues to expand.

Parker Stewart Meeks: In addition to the administration of $7 billion of hydrogen hub program.

Parker Stewart Meeks: <unk> reduction act earmarked $2 6 billion for.

The Epa's clean ports program.

Parker Stewart Meeks: As initial examples, we are actively supporting two of the top 10 ports in the country and their applications under the Clean Ports Program, which has the ambition to deploy up to 100. In the first quarter, the Department of Energy also awarded $750 million to companies advancing clean hydrogen technology, including a project in which Hyzon is a partner. Hyzon has also recently submitted a concept paper under another DOE funding program as lead applicant, which, if selected, may provide up to $14 million to help fund future expansions of our Bolingbroke fuel cell. Additionally, the U.S. Department of Treasury recently released final regulations regarding federal tax credits for purchasing clean vehicles, which makes clear that upfitters like Hyzon can be qualified manufacturers. This means that once the registration is complete,

Parker Stewart Meeks: As initial examples we are actively supporting two of the top 10 ports in the country and their applications under the clean ports program, which have the ambition to deploy up to 100 trucks.

Parker Stewart Meeks: In the first quarter. The department of energy also awarded $750 million to companies advancing clean hydrogen technologies, including to a project in which highlighted the partner.

Parker Stewart Meeks: <unk> also recently submitted a concept paper under another Doa funding program as lead advocate.

Parker Stewart Meeks: Which is selected may provide up to $14 million to help fund future expansion of our Bolingbrook yourself facility.

Parker Stewart Meeks: Additionally, the U S Department of Treasury recently released final regulations regarding federal tax credits for purchasing vehicles, which makes clear that up that theres like highs on can be qualified manufacturers.

Parker Stewart Meeks: This means that once the registration is complete fuel cell trucks outfitted by hi, Don can be eligible for the up to $40000 federal tax credit per vehicle claimed by the customer.

Parker Stewart Meeks: Fuel cell trucks outfitted by Hyzon can be eligible for up to $40,000 in federal tax credits per vehicle claimed by the customer. California remains a well-funded, zero-emission, Class A truck subsidy market, with $700 million available as of the beginning of 2020, including over $300 million dollars available through CARB's HVIP program, over $70 million dollars from the Volkswagen Environmental Mitigation Trust, and funding specifically for dredge trucks for the ports of LA and Long Beach through the Clean Truck Fund. On the refu side, California state and federal subsidies could bring the net vehicle cost to the customer equivalent for diesel for qualifying customers.

Parker Stewart Meeks: California remains a well funded zero emission class eight trucks up to the market with.

Parker Stewart Meeks: With $700 million available as of the beginning of 2024, including over $300 million available through Carbs HVAC program.

Parker Stewart Meeks: $70 million from the Volkswagen Environmental Litigation Trust.

Parker Stewart Meeks: And funding specifically for drayage trucks for the port's ability in long beach through the clean truck fund.

Parker Stewart Meeks: On the revenue side, California state and federal subsidies could bring the net legal cost of the customer equivalent with diesel for qualified customers.

Parker Stewart Meeks: In short, we are excited to build on our momentum in what we consider our very well-funded economy. Turning now to our fields of technology and manufacturing based out of our Bowling Book, Illinois facility. During the first quarter of 2024, we continue to progress in priority areas, keeping us on track for SOP of our single stack 200 kilowatt fuel cell system in the second half of 2024. As a reminder, Hyzon's fuel cell system generates 200 kilowatts from a single fuel cell, which offers a 30% lighter, 30% smaller, more cost-effective, and more fuel efficient option when compared to the conventional approach of combining two systems or stacks to reach equivalent power.

Parker Stewart Meeks: In short we are excited to build on our momentum and what we consider are very well funded ecosystem.

Parker Stewart Meeks: Turning now to our fuel cell technology manufacturing based out of our Bolingbrook, Illinois facility.

Parker Stewart Meeks: During the first quarter of 2024, we continued to progress in priority areas.

Parker Stewart Meeks: Giving us on track for <unk> of our single stack 200 kilowatt fuel cell system in the second half of 2024.

Parker Stewart Meeks: As a reminder, <unk> fuel cell system generates 200 kilowatts from a single fuel cell stack, which offers 30% lighter, 30% smaller more cost effective and more fuel efficient option.

Parker Stewart Meeks: When compared to the conventional approach of combining two systems or stacks to reach equivalent power.

Parker Stewart Meeks: We progressed toward SOP by completing five C-sample systems using production tooling in the first, with another five completed in April. We continue to advance rigorous durability testing to remain on track for SOP. We also advance our Bollingbrook facility capabilities by commissioning a dedicated full stack test station and putting it into operation, expanding our complete MEA and single cell through full system lab testing capabilities even further. Concurrently, we've been working diligently to drive greater efficiency in manufacturing in preparation for SOP. For instance, we increased our daily single cell production rate by over 2.5 times in the first quarter.

We progressed toward our Sop by completing five C sample systems using production tooling in the first quarter.

Parker Stewart Meeks: With another five completed in April.

Parker Stewart Meeks: We continue to advance rigorous durability testing to remain on track recipe.

Parker Stewart Meeks: We also advanced our bolingbrook facility capabilities by commissioning of dedicated full stack test station and putting it into operation expanding our complete MAA in single cell through full system lab testing capabilities even further.

Parker Stewart Meeks: Concurrently we have been working diligently to drive greater efficiency in manufacturing and preparation for S&P.

Parker Stewart Meeks: For instance, we increase our daily single cell production rate by over two five times in the first quarter.

Parker Stewart Meeks: In addition, our team has been working to strengthen our supply chain through a broader supply. We have identified additional suppliers across the value chain and are qualifying their components to fit seamlessly into our production. If on SOP, we expect annual capacity to be 700-200 kW fuel cell systems on three shifts, with less than $3 million of CapEx remaining to achieve that SOP and capacity. While we are working to streamline our operations as much as possible ahead of SOP,

Parker Stewart Meeks: Further our team has been working to strengthen our supply chain through our broader supply base.

Parker Stewart Meeks: We have identified additional suppliers across the value chain.

Parker Stewart Meeks: Quantifying their components to fit seamlessly into our production process.

Parker Stewart Meeks: We expect annual capacity to be 700, 200 kilowatt fuel cell systems on three shifts with less than $3 million of capex remaining to achieve that S&P in capacity.

Parker Stewart Meeks: While we are working to streamline our operation as much as possible ahead of S&P we.

Parker Stewart Meeks: We do expect to recognize additional efficiencies in future quarters and have planned capacity expansions in line with demand. We expect this approach to maintain the benefits of our asset-light business model. With fuel cell assembly capacity additions efficiently taken in line with anticipated demand increases from our customers over multi-year commercial agreements. Finally, during the first quarter, we launched the first Hyzon manufactured single cell 200 kilowatt fuel cell system and powertrain in a vehicle, and our heavy duty Calvertruck platform down in Melbourne.

Parker Stewart Meeks: We do expect to recognize additional efficiencies in future quarters.

Parker Stewart Meeks: Capacity expansions in line with demand.

Parker Stewart Meeks: We expect this approach to maintain the benefits of our asset light business model with fuel cell assembly capacity additions efficiently taken in line with anticipated demand increases from our customers over a multiyear commercial agreements.

Parker Stewart Meeks: Finally during the first quarter, we launched the first has on manufactured single cell 200 kilowatt fuel cell system, the powertrain and vehicle.

Parker Stewart Meeks: In our heavy duty caliber truck platform, yet in Melbourne, Australia.

Parker Stewart Meeks: We are collecting data on that system and vehicle at the test track, and so far, we are pleased with the results. Both the system and vehicle are operating as expected, with kilometers now being accumulated when pulling fully loaded.

Parker Stewart Meeks: We are collecting data on that system and vehicle at the test track and so far we are pleased with the results.

Parker Stewart Meeks: But the system and vehicle are operating as expected with kilometers now being accumulated pulling fully loaded trailers.

Parker Stewart Meeks: Before handing the call over to Steve, I wanted to reiterate the goals and anticipated milestones for 2024, which we discussed last quarter. First, we expect to reach SOP for a single-stack 200-kilowatt fuel cell system and our first 200-kilowatt vehicle platform in the second half of 2024. If accomplished, these would be major technological and commercial achievements, clearing the path for commercial scale-up of our leading fields of technology to large fleet customers globally.

Speaker Change: Before I hand, the call over to Steve I wanted to reiterate the goals and anticipated milestones for 2024, which we discussed last quarter.

Speaker Change: First we expect to reach for a single stack two of Nikola fuel cell system in our first 200 kilowatt vehicle platform in the second half of 2024.

Stephen Paul Weiland: We've accomplished these will be major technology and commercial achievements clearing the path for commercial scale up of our leading fuel cell technology to large fleet customers globally.

Parker Stewart Meeks: Second, we are progressing well in our trial-based large fleet customer pipeline, and we are concentrating on signing new large fleet multi-year customer agreements in 2024. Additionally, we anticipate advancing multiple fleets to the second tranche of their multistage commercial agreement, which, if accomplished, will show significant proof of customer adoption and the scaling potential for our technology with large fleet customers. Third, we expect to launch U.S. refuge truck trials in the summer of 2024, which, if successful, will be followed by initial definitive commercial agreements expected in the second half of 2024 and commercial deployments planned for 2020. We look forward to providing additional color to the market as these trials kick off. And, as mentioned earlier in my remarks, we are excited by the response and engagement from major Refuse customers to Mass.

Stephen Paul Weiland: Second we are progressing well on our trial base largely customer pipeline.

Stephen Paul Weiland: We are concentrating on signing new large fleet multiyear customer agreements in 2024.

Stephen Paul Weiland: Additionally, we anticipate advancing multiple fleets for the second tranche of their multi stage commercial agreement.

Stephen Paul Weiland: <unk> accomplished will show significant proof of customer adoption and the scaling potential of our technology with largely customers.

Stephen Paul Weiland: Third we expect to launch U S refuse truck trials in the summer of 'twenty 'twenty, four which if successful will be followed by initial definitive commercial agreements expected in the second half of 2024 and commercial deployments planned for 2025.

Stephen Paul Weiland: We look forward to providing additional color to the market as these trials kickoff.

Stephen Paul Weiland: As mentioned earlier in my remarks, we are excited by the response and engagement from major refuse customers domestically.

Parker Stewart Meeks: Fourth, we are targeting 20 to 40 global fuel cell truck deployments under commercial agreements to customers in 2024, purposefully focusing our deployments for large fleet customers to activate their multi-year commercial agreement or to advance to the second delivery of their. By deploying a smaller number of trucks per fleet to priority large fleets, we are purposely managing working capital and the associated net cash burden while maximizing the commercial foundation we have in place to enable scaling in 2025 and 2026.

Stephen Paul Weiland: Fourth we are targeting 20% to 40 global fuel cell truck deployments on our commercial agreements to customers in 2024.

Stephen Paul Weiland: We are focusing our deployments large fleet customers to activate their multiyear commercial agreements or to advance to the second delivery of their agreements.

Stephen Paul Weiland: By deploying a smaller number of trucks per fleet to pretty large fleets. We are purposely managing working capital and associated net cash burn while maximizing the commercial foundation, we have in place to enable scaling in 2025 and 2026.

Parker Stewart Meeks: Noting that this guidance is tied to progress in our strategic capital rates and may be adjusted depending on, Lastly, we are focused on strengthening our balance sheet and securing additional capital to fund our, Now, I would like to pass it over to our Chief Financial Officer, Steve Weiland.

Stephen Paul Weiland: Noting that this guidance is tied to progress in our strategic capital raise and maybe adjusted pending outcomes. This year.

Stephen Paul Weiland: Lastly, we are focused on strengthening our balance sheet and securing additional capital to fund our business.

Stephen Paul Weiland: Now I would like to pass it over to our Chief Financial Officer, Steve Weiland, Steve.

Stephen Paul Weiland: Thank you, Parker. It is great to hear about these proof points of our continued progress. The customer testimonials, refuse truck market traction, and fuel cell SOP advancement all speak to our team's execution across the business. In accounting and finance, we continue to make progress as well, driving improvements to our processes, control environment, and system. Now turning to our results, we are pleased to have recorded our first quarter 2024 revenue of $10 million compared to no revenue in a comparable prior year period.

Stephen Paul Weiland: Thank you Parker it is great to hear about these proof points of our continued progress the customer testimonials refuse truck market traction and she will sell sop advancement I'll speak to our team's execution across the business.

Stephen Paul Weiland: In accounting and finance, we continued to make progress as well driving improvements to our processes control environment and systems.

Stephen Paul Weiland: Now turning to our results. We are pleased to have reported our first quarter 2020 for revenue of $10 million compared to no revenue in the comparable prior year period.

Stephen Paul Weiland: We believe that this reflects a financial milestone for the company, and the amount of revenue this quarter is approximately equal to the total revenue recorded prior to this quarter and since the company's inception. As Parker mentioned, revenue was primarily driven by the customer acceptance of 10 coach buses deployed to Fortescue Metals Group in Australia last year. Also in Australia, we sold our first refuse truck to Ramondas following what we consider a very successful trial.

Stephen Paul Weiland: We believe that this reflects the financial milestone for the company and amount this quarter approximately equal to the total revenue recorded prior to this quarter and since the company's inception as.

Stephen Paul Weiland: As Parker mentioned revenue was primarily driven by the customer acceptance of 10 coach buses deployed to Fortescue metals group in Australia last year.

Stephen Paul Weiland: Also in Australia, we recorded the sale of our first refuse trucks remind us following what we consider a very successful trial.

Stephen Paul Weiland: Other significant components of revenue included the sale of a truck to a U.S. Dreyage customer in the first quarter, recognized revenue from trucks delivered to PFG last year that are treated as an operating lease for accounting purposes, and Final Cash Collections in China for Legacy Truck Sales. While first quarter revenue is certainly an important validator and reflection of customer acceptance, we expect continued lumpiness with revenue recognition going forward. First quarter revenue should not simply be extrapolated forward for the reasons discussed by Parker.

Stephen Paul Weiland: Other significant components of revenue included the sale of a truck to a <unk> customer in the first quarter recognized revenue from trucks delivered at <unk> last year that are treated as an operating lease for accounting purposes and.

Stephen Paul Weiland: And final cash collections in China for legacy truck sales.

Stephen Paul Weiland: While our first quarter revenue was certainly an important validated and reflection of customer acceptance. We expect continued lumpiness with revenue recognition going forward.

Stephen Paul Weiland: First quarter revenue should not simply be extrapolated forward for the reasons discussed by Parker.

Stephen Paul Weiland: Cost of revenue came to $7.8 million in the first quarter of 2024 versus $0.8 million in the comparable prior year period. Cost of revenue for this quarter was primarily related to direct materials, labor costs, and estimated warranty costs associated with FCEV sales in Australia and the UK. Costs associated with China FCEV sales were recognized in prior periods. In addition, the cash collections in China resulted in the reversal of the prior standard warranty accruals this quarter, and cost of revenue this quarter was also partially offset by proceeds from inventories.

Stephen Paul Weiland: Cost of revenue came to $7 8 million in the first quarter of 2024 versus <unk> $8 million in the comparable prior year period.

Stephen Paul Weiland: Cost of revenue for this quarter was primarily related to direct materials labor costs and estimated warranty costs associated with SCE sales in Australia and the U S.

Stephen Paul Weiland: Costs associated with China, FTE sales were recognized in prior periods. In addition to cash collections in China resulted in the reversal of the prior standard warranty accrual this quarter and cost of revenue. This quarter was also partially offset by proceeds from inventory sales.

Stephen Paul Weiland: Cost of revenue for the comparable prior year period was primarily related to cost provisions accrued for customer contract activities and inventory write-downs in Europe. Please note, in this quarter, that given certain of these items, such as no associated cost for the China sales, warranty reversal, and inventory sales, the potential implied relationship between our revenue and cost of revenue this quarter should also not be extrapolated for the reasons previously discussed. We are pleased to share that R&D, SG&A, and Net Cash Firm, excluding the first SEC settlement payment and the proceeds from the sale of our Rochester facility, all came in at or below the low end of our guidance. R&D expenses came to $10.8 million for the first quarter of 2024, versus $9.3 million in the prior year period. This increase was primarily driven by higher personnel costs supporting continued enhancements in vehicle design, vehicle software, fuel cell systems, and electric power.

Stephen Paul Weiland: Cost of revenue for the comparable prior year period, primarily related to cost provisions accrued for customer contract activities and inventory write downs in Europe.

Stephen Paul Weiland: Please note in this quarter that given certain of these items such as no associated cost or the China sales warranty reversal in inventory sales the potential implied relationship between our revenue and cost of revenue. This quarter should also not be extrapolated for the reasons previously discussed.

Stephen Paul Weiland: We are pleased to share that R&D SG&A and net cash burn excluding the first SEC settlement payment and the proceeds from the sale of our Rochester facility all came in at or below the low end of our guidance ranges.

Stephen Paul Weiland: R&D expenses came to $10 8 million for the first quarter of 2024 versus $9 3 million in the prior year period.

Stephen Paul Weiland: This increase was primarily driven by higher personnel costs supporting continued enhancements in vehicle design vehicles software fuel cell systems and electric powertrain.

Stephen Paul Weiland: This came in below our quarterly guidance of $12 to $14 million, largely due to the timing of certain development activities in support of our fuel cell. SG&A came in at $21.5 million in the first quarter of 2024 versus $30.9 million in the prior period, just below the bottom end of our $22 to $24 million guidance range. The primary reason for the decrease in SG&A is approximately $12 million in lower legal, accounting, and consulting fees related to prior litigation and the now-resolved SEC investments.

Stephen Paul Weiland: This came in below our quarterly guidance of $12 million to $14 million largely due to the timing of certain development activities in support of our fuel cell Sop.

Stephen Paul Weiland: SG&A came in at $21 5 million in the first quarter of 2024 versus $30 9 million in the prior year period, just below the bottom end of our $22 million to $24 million guidance range.

Stephen Paul Weiland: And the reason for the decrease in SG&A is approximately $12 million and lower legal accounting and consulting fees related to prior year litigation and the now resolved SEC investigation.

Stephen Paul Weiland: We ended the first quarter with $82.6 million in cash and equivalents, representing a net cash burn of $29.6 million in Q1, which is the quarterly change in cash and equivalents in short-term investments, excluding the $8.5 million first SEC settlement payment and approximately $2.9 million in proceeds received from the sale of a Rochester facility.

Stephen Paul Weiland: We ended the first quarter was $82 6 million in cash and equivalents, representing a net cash burn of $29 6 million in Q1, which is the quarterly change in cash and equivalents and short term investments excluding the $8 5 million first SEC settlement payment and approximately $2 9 million in proceeds received from the sale of our Russia.

Stephen Paul Weiland: Your facility and in line with how we provided the guidance range for this quarter this came to $24 million.

Stephen Paul Weiland: And in line with how we provided the guidance range for this quarter, this came to $24 million. This was at the bottom of our guidance range of $24 to $27 million, reflecting continued focus on cost control. This net cash burn, excluding these items, represents our lowest quarterly net cash burn over the last 10 quarters, the fifth consecutive quarter of declining burn, and an average monthly net cash burn of approximately $8,000. We continue to believe that we can operate our business below a $10 million average monthly net cash burn, reflective of how we are operating at the moment by remaining focused on managing our costs while prioritizing investments in our. Turning to guidance, and similar to last quarter, we are not providing full-year guidance given the dynamic nature of our business and current capital risk.

Stephen Paul Weiland: This was at the bottom of our guidance range of $24 million to $27 million, reflecting continued focus on cost control.

Stephen Paul Weiland: Net cash burn excluding these items represent our lowest quarterly net cash burn over the last 10 quarters fifth consecutive quarter of declining burn in an average monthly net cash burn of approximately $8 million. We continue to believe that we can operate our business below a $10 million average monthly net cash burn reflective of how we are operating at the moment by remaining focused.

Stephen Paul Weiland: <unk> on managing our costs, while prioritizing investments in our development.

Stephen Paul Weiland: Turning to guidance and similar to last quarter, we are not providing full year guidance given the dynamic nature of our business and current capital raising efforts.

Stephen Paul Weiland: As stated previously, we believe that we have opportunities to significantly reduce burn if needed, while preserving the core IP and strategic value of Hyzon, such as keeping our fuel cell SOP on track for the second half of this year. We are providing guidance for the second quarter, noting that it reflects our current business operating model, which is subject to change based on our capital raise outlook. We estimate that R&D will be in the range of $11 to $13 million, SG&A in the range of $26 to $30 million, and Net Cash Firm in the range of $27 to $30 million.

Stephen Paul Weiland: As stated previously we believe that we had opportunities to significantly reduce burn if needed while preserving the core IP and strategic value of highs on such as keeping our fuel cell Sop on track for the second half of this year.

Stephen Paul Weiland: We are providing guidance for the second quarter, noting that it reflects our current business operating model, which is subject to change based on our capital rate outcomes.

Stephen Paul Weiland: We estimate that R&D will be in the range of $11 million to $13 million SG&A in the range of $20 million to $30 million and net cash burn in the range of 27% to $30 million.

Stephen Paul Weiland: While the second quarter R&D and SG&A guidance ranges are roughly in line with the first quarter, the net cash burn guidance does reflect an uptick from the first quarter. This is largely driven by the timing of working capital, annual bonus payments, and pay period timing.

Stephen Paul Weiland: While second quarter, R&D and SG&A guidance ranges are roughly in line with the first quarter. The net cash burn guidance does reflect an uptick from the first quarter. This was largely driven by the timing of working capital annual bonus payments and pay period timing.

Stephen Paul Weiland: Thank you, and I will now hand the call back over to Parker.

Stephen Paul Weiland: Thank you and I will now hand, the call back over to Parker.

Parker: Thank you Steve.

Parker Stewart Meeks: Our start to 2024 strengthens our belief that this year is building upon the inflection point and the commercialization of our technology that we achieved in 2020. We completed the commercial cycle on vehicles deployed in the transition from 2023 to 2024, as demonstrated by our quarterly revenue progression. We are encouraged by the data and feedback from the first vehicles deployed with PFG. We also announced the launch of our first U.S. fuel cell refuse vehicle with NewWay last week and are excited to begin trials of both the U.S. refuse truck and the 200 kilowatt Class 8 fuel cell truck this summer.

Parker: Our start to 2024 strengthens our belief that this year is building upon the inflection point and the commercialization of our technology that we achieved in 2023.

Parker: We completed the commercial cycle on vehicles deployed in the transition from 2023 to 2024 as demonstrated by our quarterly revenue progression.

Parker: We are encouraged by the data and feedback from the first vehicles deployed with PFG.

Parker: We also announced the launch of our first U S fuel cell refuse vehicle with new way last week and are excited to begin trials in both the U S refuse truck in the 200 kilowatt class a fuel cell truck this hub.

Parker Stewart Meeks: As mentioned earlier on the call, we remain on track for SOP of our single stack 200 kilowatt fuel cell system in the second half of this year while improving our manufacturing efficiencies and expanding our facility capability. We expect our production facility in Bloomingbrook, Illinois to become fully operational in the second half of this year with minimal remaining CapEx required. Overall, we are pleased with our progress, and I would like to thank the whole team here at Hyzon for their continued dedication and execution, which started the year with a strong foundation.

Parker: As mentioned earlier on the call we remain on track for our Sop of our single stack 200 kilowatt fuel cell system.

Parker: Second half of this year, while improving our manufacturing efficiencies and expanding our facility capabilities.

Parker: We expect our production facility in Bolingbrook, Illinois to become fully operational in the second half of this year with minimal remaining capex requirements.

Parker: Overall, we are pleased with our progress and I would like to thank the whole team here at <unk> for their continued dedication and execution, which started the year with a strong foundation.

Parker Stewart Meeks: Finally, I would like to thank our customers and stakeholders for the continued partnership and for sharing our mission to reduce emissions across the heavy-duty industry through hydrogen fuel cell technology. With that, Operator, we are now ready for questions.

Parker: Lee I would like to thank our customers and stakeholders for their continued partnership and for sharing our mission to reduce emissions across the heavy duty industry through hydrogen fuel cell technology.

With that operator, we are now ready for questions.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw that question, again, press star 1. Your first question comes from the line of Craig Irwin with Roth Capital Partners. Please go ahead. Good evening.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw that question again press star one.

Speaker Change: Your first question comes from the line of Craig Irwin with Roth Capital Partners. Please go ahead.

Craig Irwin: Good evening, and thanks for taking my questions. So, Parker, a lot of progress this quarter, so many different things we can hone in on. But I guess the future business plan, right? The growth really benefits from your introduction of this 200 kilowatt fuel cell stack. Can you maybe give us a little bit more color on what you've learned from the sea samples that were made, the five in the quarter and then the five in April?

Craig Irwin: Good evening and thanks for taking my questions.

Craig Irwin: So Parker lot of progress this quarter.

Craig Irwin: So many different things we can we can hone in on but I guess the.

Craig Irwin: Future business plan right.

Speaker Change: The growth really benefits from your ear introduction of this 200 kilowatt fuel cell stack.

Parker: Can you maybe.

Parker: Give us a little bit more color on what you've learned from the sea samples that were made to five in the quarter and then the five in April.

Craig Irwin: You know, I guess the lower, 30% lower volume and weight is kind of an engineering solution. We know that's gonna be on target or better, but the target's a 25% lower cost. 20% improved miles per kilogram of hydrogen. Can you just confirm for us that this is being validated by the sea samples? And can you maybe just explain a little bit about the testing you're doing with these before you move to on-road testing and the start of production in just a few months?

Parker: I guess, the lower 30% lower volume and weight is kind of an engineering solution wait window, that's going to be on target or better.

Parker: But the.

Parker: The targets of 25% lower cost and 20% improved miles per kilogram of hydrogen can you can you just confirm for US that this is being validated by the sea samples and can you maybe just explain a little bit about the testing you're doing with fees.

Parker: <unk> moved to <unk>.

Parker: On road testing and.

Parker: <unk>.

Parker: Startup production in just a few months.

Parker Stewart Meeks: Absolutely. First, Craig, great to hear your voice. Thanks so much for the question.

Parker: Pascual first Greg Great day aboard thanks. So much further question, we love big into our technology. So I'm happy to to go deep there. So just take a step back for a moment.

Parker Stewart Meeks: And we love digging into our technology, so I'm happy to go deep there. But just take a step back for a moment.

Parker Stewart Meeks: You know, we are at the C-sample stage in our 200-kilowatt fuel cell system SOP. This system has been in development for 20 years and stands on the back of 20 years of overall technology development in IP. At Hyzon, we're quite proud to have now over 160 total patents between granted and pending applied to underpin that IP, right, all the way from the MEA, the catalyst on the MEA, the membrane electrode assembly, through a single-cell, you know, the bipolar plate stacking system.

Parker: We are at the C sample stage in our total kilowatt fuel cell system SLP.

Parker: This system has been in development stands on the back of 20 years of overall technology development and IP.

Speaker Change: Hi, John we're quite proud to have now over 160 total.

Speaker Change: Patents between granted and pending applied.

Speaker Change: Underpinned that IP right all the way going all the way from the EMEA and the catalyst on the EMEA the membrane electrode assembly for single cell the bipolar plate.

Parker Stewart Meeks: And, you know, when you're going from a 110-kilowatt fuel cell system to our 200-kilowatt fuel cell system, which is actually, you know, a 250-kilowatt stack, the durability testing and the SOP process that we go through are really validating at every element where it's worth measuring the durability, the performance, and, to your point, the implication for cost and for performance, right? So it starts with MEA and single-cell testing, right, measuring performance, measuring how we're doing in terms of stress testing, durability testing at that level, short stack testing, which is anywhere from five to 10 kilowatts worth of cells stacked up, stack testing, and then full system testing.

Speaker Change: <unk> and system.

Speaker Change: What are you going from a 110 kilowatt fuel cell system.

Our 200 kilowatt.

Speaker Change: Fuel cell system, which is actually a 250 kilowatt stack.

Speaker Change: The the durability testing and the SSP process that we go through.

Speaker Change: Is really validating.

Speaker Change: At every element, where it's worth measuring the durability of that performance and to your point the implication for for cost and for performance right. So.

Speaker Change: With EMEA and single cell testing.

Speaker Change: Measuring performance measuring how we're doing in terms of stress.

Speaker Change: Stress testing durability testing at that level of short stack testing, which is anywhere from five to 10 kilowatts worth of cells stacked up stack testing and then full system testing and I got on those links to describe.

Parker Stewart Meeks: And I'll go to those links to describe, you know, the deeper elements of our SOP to give everyone a sense of what the learnings that we achieve at the C-sample stage build on all the learnings that we've achieved throughout the process from A-sample to B-sample from, you know, 22 and 23 into the C-sample phase that we are in now. So with that as a backbone,

Speaker Change: Yes.

Speaker Change: Deeper elements of our therapy to give.

Speaker Change: Everyone is.

Speaker Change: But the learnings that we achieved at the CCF will stage, we build on all of the learnings we've achieved throughout the process from a sample to be sample from 'twenty.

Speaker Change: <unk> 22, and 'twenty, three and said to see sample base that we are in now.

Speaker Change: So with that as the backdrop.

Parker Stewart Meeks: We are learning quite a bit in the C-sample phase on the back of all the learnings that we had last year at the B-sample stage. You know, some of the learnings do apply to elements like the MEA, like the catalyst and the design of the MEA itself. You know, when we see different performance in testing and durability, it allows us to identify at the cell level because we do have RFID and other tagging systems to identify performance within a stack, within a short stack, where we see variation, where we see better performance, and how do we replicate that more consistently across the production process, which is unique to Hyzon in some ways versus competitors, because we do go all the way back to the MEA, right? Additionally, in stack testing and in full system testing, we get a sense of the overall stack performance and how that varies from stack to stack.

Speaker Change: We are learning quite a bit in the sea samples phase on the back of although earnings that we had last year at the <unk> sample stage.

Speaker Change: Similar learnings do apply to.

Speaker Change: Elements like the EMEA like like the catalyst in the design of the EMEA itself.

Speaker Change: When we see different performance in testing and durability.

Speaker Change: Allows us to identify at the cell level, because we do have RFID and other tagging systems to identify performance, we're going to stack within a short stack where.

Speaker Change: Where do we see variation, where do we see better performance and we replicate that more consistently across across the.

Speaker Change: Production process, which is unique to highest on in some ways versus competitors because we do go all the way back to the EMEA right.

Speaker Change: Additionally, in stack testing and in full system testing, we get a sense of the full stack performance and how that varies from stack to stack and additionally at the system level, we get an opportunity to test BNP because.

Parker Stewart Meeks: Additionally, at the system level, we get an opportunity to test BOP because we look at what's different and what we are trying to achieve in this step change, which we've been able to achieve differentially from others, at least in an, you know, ex-China on-road mobility space of 200 kilowatts plus in a single stack, single system. It is about going from a smaller single cell to a 25% larger active area, right, and making sure that we're getting that consistent performance across that cell level.

Speaker Change: Because when you look at what's different and what are we trying to achieve and the step change, which we have been able to achieve differentiate from others and yesterday.

Speaker Change: China on road mobility space, a 200 kilowatts, plus in a single stack single system.

Speaker Change: It is about going from.

Speaker Change: Our smaller single cell to a 25% larger active area.

Speaker Change: Right and making sure that we're getting that consistent performance across that that cell level. It's about evaluating the full stack level hundreds of those cells stacked up and getting that consistent.

Parker Stewart Meeks: It's about evaluating the full stack level of hundreds of those cells stacked up and getting that consistent, you know, power generation, that consistent water diffusion performance. And at the BOP level, you know, the 200 kilowatt system that the BOP we've developed with our suppliers over time, and it's getting to things like injectors and humidifiers and how the BOP is performing, and supplier evaluation as our supply chain group under our CEO of BOP Banerjee has been driving in collaboration with Dr. Mohrdieck, our CTO, how we enhance and advance our BOP supply

Speaker Change: Power generation that consistent water diffusion performance and at the <unk> level.

Speaker Change: The 200 kilowatt system that we've developed with.

With our suppliers over time, and it's getting into things like injectors, and humidifiers and how they're performing and supplier evaluation is our supply chain group under our CLO energy has been driving in collaboration with Dr. <unk> <unk>, our CTO, how we enhance and advance our <unk> supply.

Shane: Shane so.

Parker Stewart Meeks: So, you know, all of these different elements and facets are tested. We have seen tens of improvements in design, I'll say, over our entire development process on the 200 kilowatt to date. And all of that gives me and our team tremendous confidence that we are properly developing this technology, that we're finding the things that we need to find, to your point, to improve performance and durability, and to identify the cost reduction opportunities as well as we look forward to post-SOP performance advancement. Where, given that we do believe, at least publicly known, at least, that we are significantly ahead of others in this scale of fuel cell system technology in mobility, our goal is So, we're quite excited about completing the C-sample phase, moving to pre-production, you know, relatively soon, and being on track for our SOP in the second half of this year.

Shane: All of these all of these different elements and facets are tested.

Shane: We would have seen tens of improvements in design I'll say over over our entire development process 200 kilowatt to date and.

Shane: And all of that gives me and our team's tremendous confidence that we are properly developing this technology that we're finding the things that we need to find to your point to improved performance and durability and to identify the cost reduction opportunities as well as we look forward to the coast as Sop performance advancement, where given that we do believe.

Shane: Leave that based on where we are publicly known at least that we are.

Shane: Significantly ahead of others in this scale.

Shane: Youll sell system technology in mobility.

Goal is by the time, others have 200 kilowatt plus system coming to market.

Shane: There were a couple of years potentially improved on the cost and the performance curve, which a lot of those leading indicators of initiatives start even now so we're quite excited about completing the <unk> sample phase moving to preproduction.

Shane: Relatively soon and being on track farmers so fee in the second half of this year.

Craig Irwin: Thank you for that. So, my second question is really one where I'd like a little bit of clarification, maybe if you could share it with me. The guidance for 20 to 40 deployments to commercial customers in 2024, how many of those units do you expect to use the new 200 versus the 120 that you've been supplying to customers to date? And I assume they're going to be sort of heavily back-end loaded, mostly fourth quarter, some third quarter. And can you maybe talk a little bit about geography or any other color, you know, maybe PFG as well, to help us figure out how to set our model?

Thank you for that.

Speaker Change: My second question is really one.

Speaker Change: Well I'd like a little a little bit of clarification, maybe if you can share at the guidance for 20 to 40 deployment to commercial customers in 2024.

Speaker Change: How many of those units do you expect to use the new.

Speaker Change: 200 versus that 120.

Speaker Change: <unk> been supplying to customers to date.

Speaker Change: And I assume they're going to be heavily backend loaded mostly fourth quarter some third quarter.

Speaker Change: And can you maybe talk a little bit about geography or any other color.

Speaker Change: Maybe PFG as well to.

Speaker Change: To help us figure out how to set our models.

Parker Stewart Meeks: Now, great, and happy to provide as much as we can there, Craig. So to start, you're right, this year, as I've said before, is a year of transition, right, from the 110 kilowatt fuel cell system to the 200 kilowatt fuel cell system with its SOP, and with the SOP in parallel to our 200 kilowatt heavy-duty fuel cell truck platform. You know, we did unveil the first 200 kilowatt fuel cell system in a heavy-duty truck in Australia last quarter, which was a big, big moment for us.

Speaker Change: No great.

Happy to provide as much as we can there Craig so to start.

Speaker Change: Youre right. This year as I've said before is a year of transition from the 110 kilowatt fuel cell system for the 200 kilowatt fuel cell system with <unk> and with the ESOP and parallel of our two kilowatt heavy duty fuel cell truck platform.

Speaker Change: We did unveil the first 200 kilowatt fuel cell system and a heavy duty truck in Australia.

Parker Stewart Meeks: That was, you know, the first Hyzon-produced 200 kilowatt fuel cell system unveiled in a truck, preparing to go into its commercial trials down there with our customer TR Group, and we're quite excited to have that truck on the road with the U.S. truck in development in parallel behind it, and we're also excited about our upcoming 200 kilowatt U.S. heavy-duty Class A truck, which, As we've stated publicly before, the PFG agreement had the first five 110 kilowatt trucks. We've deployed the first four of those five, with the fifth coming relatively soon.

Speaker Change: Last quarter, which was a big moment for us that was the first highs on produce 200 kilowatt fuel cell system unveiled in Archrock preparing to go into its commercial trials down there and with our customer PR group and we're quite excited to have that truck on the road.

Speaker Change: With the U S truck in development in parallel behind it and we're also excited about our upcoming toward a kilowatt.

Speaker Change: U S heavy duty class eight trucks, which as we've stated before is preparing for its trials to start this summer.

Speaker Change: And we're anticipating a.

Speaker Change: A few things on the back of that as we've stated publicly before.

Speaker Change: <unk> agreement and the <unk>.

Speaker Change: First 510 kilowatt trucks.

Speaker Change: <unk> the first four of those five with the fed coming relatively soon.

Parker Stewart Meeks: The second truck is 15 200-kilowatt trucks that are just pending a 200-kilowatt truck trial, which we're excited to conduct with PFG relatively soon, and assuming that trial is successful, we'll then move into negotiating the commercial definitive agreement on all or part of those 15 trucks as part of that second truck, which will be a significant moment, not just for us, we think, for this segment, for the fuel cell truck segment, because I'm not aware of many, if any, others that have announced a second tronch delivery of a major fleet, and that's something I may have missed something, but we would be at least among the few, if not the first, to announce a second deployment to a major fleet. So, you know, it certainly is, we are anticipating that 200-kilowatt driving through this U.S. trial program that we've commented on across the refuse truck and the Class 8 200-kilowatt truck, 24 different fleet trials that are either scheduled or in file scheduling for essentially the second half of this year, winning over into January a bit, and that assuming success, converting into initial multi-year commercial for new fleet customers, and then hopefully advancing PFG to their second order tronch, assuming success, and also that obviously deploying globally, you know, in Australia on the back of that vehicle that we unveiled, and that capital platform being launched through that.

Speaker Change: The second tranche was 15 200 kilowatt trucks that are just pending order kilowatt truck trial, which we're excited to conduct with PFG relatively soon.

Speaker Change: And assuming that trial success.

Speaker Change: Appreciated.

Speaker Change: The commercial definitive agreement on all or part of those 15 trucks as part of that second tranche, which will be a significant moment not just for US we think for for this segment for the fuel cell trucks segment.

Speaker Change: Because I'm not aware of many if any others that have announced a second tranche delivery of a major fleet and Thats something.

Speaker Change: EMEA thats, something but we would be at least among among the few if not the first to announce the second deployment to a major a major fleet.

Speaker Change: So it certainly as.

Speaker Change: We are anticipating that 200 kilowatt driving through this U S trial program that we've commented on across the refuse truck in the class eight 200 kilowatt trial 24 different trials that are either scheduled or in final scheduling for essentially the second half of this year bleeding over into January a bit.

Speaker Change: And that that assuming success converting into initial multiyear commercial Pittsburgh nuclear customers and then hopefully advancing PFG to their second order tranche assuming success.

Speaker Change: And also that obviously deploying globally.

Speaker Change: <unk>.

Speaker Change: In Australia on the back of that vehicle that we unveiled.

Parker Stewart Meeks: So specifically to the 20 to 40 deployment guidance, that will be that is anticipated to be a mix of 110 kilowatt and 200 kilowatt fuel cell system vehicles. The refuse truck platform that was launched first in Australia with our successful commercial trial that's converted to a sail, that is on a 110 kilowatt fuel cell. And the refuse truck actually only needs 110 kilowatt fuel cell systems to perform the use case.

Speaker Change: And that category platform being washed through through that so specifically to the 20 to 40 deployment guidance.

Speaker Change: And that will be that is anticipated to be a mix of 110 kilowatt and 200 kilowatt fuel cell system vehicles.

Speaker Change: The the refuse truck platform that was launched first in Australia with our successful commercial trial thats converted to a sale with.

Parker Stewart Meeks: That truck performed beautifully, as we noted in the prepared remarks, doing all the work of combustion and up to 18% grades and not needing to refuel over the course of an entire combustion route day. And compared to many battery-electric trucks, you know, performing twice the work rate in terms of cans lifted before those battery trucks have to go home and recharge. So that's all with the 110 kilowatt. We do believe there's a future for the 200 kilowatt in a refuse truck application.

Speaker Change: Remind us that isn't a 110 kilowatt fuel cell and the refuse truck actually only needs 110 kilowatt fuel cell systems to perform the use case that truck performed beautifully as we noted in the prepared remarks, we're doing all the work of combustion and up 18% grades.

Speaker Change: <unk>.

Speaker Change: Not needing to refuel over the course of an entire combustion route day.

Speaker Change: And compared to many battery electric trucks performing twice the work right in terms of cans lifted before that does <unk> have to go home and and to recharge. So that's all of that 110 kilowatt. We do believe there is a future for the 200 kilowatt and refuse truck application.

Parker Stewart Meeks: The reason is fuel efficiency. You know, the fuel cell loves to be operated at 60% fuel efficiency, even though 110 kilowatts certainly can do the work and perform very well in a future generation and future development of that platform. We may advance to a 200 kilowatt truck, and that we think could even be a better total cost of ownership. But for this year, what I can say at this point is it'll be a mix.

Speaker Change: The reason this fuel efficiency.

Speaker Change: The fuel cell loves to be operated at 60% fuel efficiency, even though once the kilowatt certainly can do the work and perform very well.

Speaker Change: And our future generation future development of that platform, we may advance to a 200 kilowatt truck and that we think could even be a better total cost of ownership, but for for this year. What I can say at this point is it'll be a mix we do have.

Speaker Change: Mix of.

Speaker Change: Deployments planned geographically as well.

Parker Stewart Meeks: We do have a mix of deployments planned geographically as well. And, you know, as we progress throughout the year, pending, you know, adjustments that may be made based on our capital raise progress, we may be able to give a bit more detail going forward.

Speaker Change: And.

Speaker Change: As we progress throughout the year.

Speaker Change: Pending adjustments that may be made based on our capital raise progress.

Speaker Change: We may be able to give a bit more detail going forward.

Craig Irwin: Thank you. So, to my last question, if I may, before I hop back in the queue, the $3 million in CapEx remaining for startup production and your initial targeted capacity, can you maybe help us with the timing on that CapEx? And is there any risk around the supply chain for equipment delivery or other parts that you need there for SOP that you see at the moment?

Speaker Change: Thank you my last question, if I may before I hop back in the queue.

Speaker Change: The $3 million in Capex remaining towards startup production and your initial targeted capacity can you maybe.

Speaker Change: Help us with the timing on that Capex and is there any risk around supply chain for equipment delivery or other parts that you need there.

Speaker Change: So Pete that you would see at the moment.

Parker Stewart Meeks: Yeah, look, I mean, what I'll say, which I think all of us in this position would say is that there's always risk. Right.

Pete: Yes look I mean, what I'll say.

Pete: Which I think all of us in this position, let's say is there is always risk.

Parker Stewart Meeks: There is always supply chain risk, no matter what stage you're at. But the facts are, you know, with less than three million CapEx remaining, obviously, the vast majority of equipment is already on site and either commissioned or in commissioning. You know, at this point, we feel very comfortable with the $3 million number, but it could be less than that. And, you know, the bulk of our focus at SOP and the CapEx remaining is really the final commissioning of equipment that ties either to sort of camera-based quality control or the automation in areas like the single cell and the stack area, right, to confirm our 700 units per year, 200 kilowatt fuel cell system capacity on three shifts that we are anticipating the facility to be capable of at SOP.

Pete: <unk> is our supply chain or estimated what stage youre at but the facts are.

Pete: With less than 3 million Capex remaining obviously the vast majority of equipment is already on site and either commissioned during commissioning.

Pete: At this point, we feel very comfortable with the $3 million number.

Pete: But it could be less than that.

Pete: And.

Pete: The bulk of our focus in the S&P.

Pete: Capex remaining Israeli.

Pete: The final commissioning of equipment that ties either to sort of camera base.

Pete: Quality control or the automation in areas like the single cell and the.

Pete: The stack area right to confirm our 700 units per year 200 kilowatt fuel cell system capacity on three shifts that we are anticipating.

Pete: The facility to be capable of at at S&P.

Speaker Change: So we haven't we haven't.

His more detailed not in terms of the burn rate of that $3 million of Capex.

Parker Stewart Meeks: So we haven't disclosed more details than that in terms of the burn rate of that $3 million of CapEx. But, you know, the SOP we have set is on track for the second half of this year. And what I'll say is, you know, we are comfortable with that number and with that timing where we are today. Of course, there is some risk, but I'd say the risk is less in the supply chain; it's more in the progress and the completion of the required commissioning activities and the durability and other testing we have to do to validate our progression from sample to pre-production and then to full SOP.

Speaker Change: So we have said is on track for second half of this year.

Speaker Change: And what I'll say is we're comfortable.

Speaker Change: With that number and what that timing, where we are today and of course, there is some risk but I.

Speaker Change: I'd say the risk is less and less in supply chain, it's more than in the progress and the completion of the required commission activities and the durability and other testing we have to do to validate our progression from C sample to preproduction than before.

Craig Irwin: Great. Well, congrats again on all the progress this quarter. Impressive.

Great well congrats again on all the progress this quarter impressive.

Speaker Change: Thanks, so much Greg.

Stephen Paul Weiland: Your next question comes from the line of Stephen Fox with Fox Advisors. Please go ahead.

Speaker Change: Your next question comes from the line of Steven Fox with Fox Advisors. Please go ahead.

Stephen Paul Weiland: Hi, good morning. I guess, first of all, I know revenue recognition can be lumpy, etc., but can you give us a sense for the number of trials underway that could lead to revenue recognition this year and the odds of what could play out versus what follow-on steps could come with some of these trials? And then there was a follow-up.

Steven Fox: Hi, Good morning, I had a couple of questions as well I guess.

First of all.

Steven Fox: I know you don't want to.

Steven Fox: Revenue recognition can be lumpy et cetera, but can you give us a sense for where they are.

Steven Fox: So there's a number of trials underway that can lead to revenue recognition this year.

Steven Fox: And sort of the odds of what could play out versus what follow on steps could come with some of these trials and then I had a follow up.

Parker Stewart Meeks: Yeah, that's great. Thanks. First of all, Steve, thanks so much for joining us and for the engagement as always.

Speaker Change: Yeah, that's great. Thanks for first of all thanks for joining us and for the engagement as always.

Speaker Change: On our commercial pipeline and process a company. The comment then I'll ask Steve to talk about our revenue recognition timing.

Parker Stewart Meeks: So, on our commercial pipeline and process, there are a couple things to comment on, and I'll pass it to Steve to talk about our revenue recognition timing. So, we are quite excited, as stated in the prepared remarks, about the fullness of our trials program and to take a step back for something that may be newer to the company's commercial strategy. You know, we are very focused, as you know, Steve, on large fleet back-to-base use cases like dredging, food and beverage delivery, and now refuse. You know, those large fleets were typically doing months of work ahead of a potential trial. Right? These are not, you know, your drive-by stop in and take it out for a spend. Right?

Speaker Change: So we are quite excited as stated on the bird remarks about the the fullness of our trial program.

Speaker Change: Take a step back for some that may be.

Speaker Change: Newer to the company's commercial strategy, we are very focused as as you know Steve on large large fleet back to base use cases, like drayage, and food and beverage delivery and now refuse.

Speaker Change: Those large fleets, where typically take months of work ahead of a potential trial right. These are not.

Speaker Change: Youre drive by stop in and take it out for a spin right. We spent months of time with executive teams and with fleet teams on fuel cell trucks, Tcl performance expectations stimulating routes simulating performance and collateral we identify not why fuel cells. The only answer which is not our view, but where fuel cell <unk>.

Parker Stewart Meeks: We've spent months of time with executive teams and with fleet teams on fuel cell trucks, TCO, performance expectations, simulating routes, simulating performance, and collaboratively identifying not why fuel cell is the only answer, which is not our view, but where fuel cells should clearly outcompete. And that's an expanding part of the route tree we see today, given the struggles of battery electric trucks with range and payload. But really honing in on where we should run the trials because that is where the fleet is going to scale to start. And then what does that realistic scaling look like, which is a factor in a few things.

Speaker Change: The out compete and Thats, an expanding part of the route tree, we see today, given the struggles of battery electric trucks and range and payload.

Speaker Change: But really honing in on where it should be run the trials because that is where the fleet is going to scale to start and then what is that realistic scaling look like which is a factor of a few things one is.

Parker Stewart Meeks: One is their appetite to take delivery and scale tied to their ESG or other board-driven goals and or regulations and or customer requirements. And I'll come back to that on refuse, which is a really tremendous market that's been developing rapidly. Second is the availability of fuel, which all fits together in the way that we're looking at scaling up a single customer and where we see the market developing in total. So, all that said, the goal is to have a trial that then is the last step to really confirm and negotiate and put in place a multi-step, typically three to four tranche commercial agreement, where the first tranche is typically binding, and the tranches behind that are contingent.

Speaker Change: Is there appetite to take.

Speaker Change: Take delivery at scale have tightened their ESG or other board driven goals and nor regulations and our customer requirements and I'll come back to that I'll refuse, which is a really tremendous market that has been developing rapidly.

Speaker Change: Second is the.

Speaker Change: The availability of <unk>.

Speaker Change: Fuel.

Which all fits together in the way that we're looking at scaling up a single customer and where we see the market developing and in total so all of that said the goal is to have a trial that then is the last step to really confirm it can negotiate and put in place a multi step typically three to four tranche commercial agreement, where the first tranche is typically binding.

Parker Stewart Meeks: The example being our agreement with Performance Food Group, which is a 50 truck total potential with five trucks binding up front and the 15 and 30 truck tranches contingently behind it, the last being an option. So, with all that in mind, you know, we have 24 fleet trials right now scheduled or in scheduling across the Class 8 and the refuse truck. You know, some of those are second trials like Performance Food Group, where they trialed and made the initial agreement with us based on the 110 kilowatt trial.

Speaker Change: The tranches behind that.

Speaker Change: Our contingent example, being our agreement with performance Food group, which is a 50 truck total potential with fire trucks binding upfront in the 15% to 30 truck tranches contingently behind it as being an option. So with all that backdrop, we have 24 fleet trials right now scheduled or in scheduling across the class eight in the refuse truck.

Parker Stewart Meeks: The 200 kilowatt trial is to, assuming success, confirm the second tranche, which would be their first deployment of 200 kilowatt trucks, which could be up to 15. Some of them are fleets that have been with us for some time, may have trialed the 110 kilowatt truck but then decided the 200 kilowatt was really what they needed for the use case, really heavy loads, really long distances. And those are going to be tested, having already had a good experience with the 110 kilowatt truck but wanted to confirm that the 200 kilowatt can do everything that they need it to do.

Speaker Change: Some of those are second trials like performance food group, where they trialed and made the initial agreement with US based on the 110 kilowatt.

Speaker Change: 200 kilowatt trial as to assuming success confirmed the.

Speaker Change: The second tranche, which would be their first deployment of 200 kilowatt trucks.

Which could be up to 15.

Speaker Change: Some of them are fleets have been with us for some time may have trial. The 110 kilowatt truck, but then decided that 200 kilowatt was really what they needed for the use case really heavy loads really long distances.

Speaker Change: And those are going to be trailing having already had a good experience with the ones in kilowatt truck, but when it's a confirmatory kilowatt can do everything that they needed to do in summer fleets that are trailing for the first time. They did not follow the 110 that waited for the 200 kilowatt.

Parker Stewart Meeks: And some are fleets that are trialing for the first time, right, that did not trial on the 110 kilowatt, that waited for the 200 kilowatt. And what I'd say is, you know, for the fleets that have trialed previously and or that are already under contract for a 110, you know, trying the 200 and then taking delivery of a truck this year, if we're able to not have the same risk sharing mechanisms that we have on the first deliveries, the first deployments, excuse me, that could lead to revenue recognition sooner.

Speaker Change: <unk>.

Speaker Change: What I'd say is for the fleets their trial previously.

Speaker Change: And or that are already under contract for 110 trying to 200, and then taking delivery of a truck. This year. If we're able to not have the same risk sharing mechanisms that we have on the first deliveries the first deployments excuse me.

Speaker Change: That could lead to revenue recognition sooner.

Parker Stewart Meeks: Today, not every contract, but most contracts that we have with large fleets, they want some kind of risk share on the first. Whether that's a buyback guarantee or some other risk sharing mechanism, which does delay revenue recognition, which you're seeing in some of our performance expectations for revenue in the future and some of the way that we've been realizing revenue in small numbers before Q1. Q1, where that does show with the Fortescue buses, you know, the ability for revenue to be recognized in bunches, basically, if we hit a big performance obligation that we're able to successfully navigate. In this case, the customer accepted those 10 coaches and buses.

Speaker Change: Today, not every contract, but most contracts that we have with large fleets. They want some kind of risk share on the first tranche, whether that's a buyback guarantee or some other risk sharing mechanisms, which does delay revenue recognition, which youre seeing in some of our performance expectations for revenue in the future and some of the way that we've been realizing revenue.

Speaker Change: And phone numbers before too.

Speaker Change: Q1.

Speaker Change: That does show with the Florida SKU buses.

Speaker Change: The ability for revenue to be recognized.

Speaker Change: In bunches basically if we hit a big performance obligation that we're able to successfully navigate in this case the customer accepted.

Speaker Change: Those those 10 coach.

Parker Stewart Meeks: So what I say is the trials, the outcome we're looking for from the trials is really contracts. It's new multi-year large fleet contracts with large fleets that we're announcing and showing the market. Our 200 kilowatt truck and our refuse truck is performing, it's giving fleets confidence to sign multi-year agreements with at least some binding provision in them. And then for some of them, it could trigger a second tranche delivery, which if there are no holdbacks on that second delivery, then that would lead to potentially immediate or faster revenue recognition.

Speaker Change: So what I'd say is the trials the outcome. We're looking for from the trials is really contracts its new multi year largely contracts with large fleets that were announcing store in the market.

Speaker Change: 200 kilowatt truck <unk> refuse truck is performing it is giving fleets competent to sign multi year agreements with at least some binding provision in them and then for some of them. It could it could trigger a second tranche delivery switch if there are no hold backs on that second delivery.

Then that would lead to potentially immediate or faster revenue recognition.

Parker Stewart Meeks: So a long-winded answer to say, what we would point you to for the trials that would be a success for us is confirming a second tranche order where that is in play, and or more importantly, you know, confirming new large fleet multi-year contracts that we have slated for deployments either starting in 2024 or 2025. Steve, do you want to add anything on revenue, Rexa? Yeah, thanks, Parker.

Speaker Change: So a long winded answer to say, what I would look for.

Speaker Change: What we would point you to for the trials that would be success for us is confirming our second tranche order where that is in play and or more I think more importantly.

Speaker Change: Importantly, Kurt.

Cvs: Confirming new large fleet multiyear contracts that we have slated for deployments either starting in 2024 or 2020 with Cvs to add anything on the revenue Rexam, yes. Thanks, Parker and I think you covered a lot of it just a couple of observations I'd make I think Parker pointed out rightly really depends on the <unk>.

Stephen Paul Weiland: Yeah, thanks, Parker, and I think you covered a lot of it. There are just a couple of observations I'd make.

Stephen Paul Weiland: I think Parker pointed out, rightly, it really depends on the contract terms, you know, for these trials, how that moves forward from that activity, right, because to be recognized as revenue can't just be a deployment, right? It has to be delivered and accepted, and that will really come down to, you know, each individual customer, each individual contract, sometimes on a truck-by-truck basis. Clearly, in that global deployment range of 20 to 40, there are revenue vehicles in there, and I guess, you know, the best thing I can point you to or read in the financial statements would be when you pull up in the queue to go dive into note three on revenue, and you'll see there we talk about, you know, the transaction price associated with the remaining performance obligations on the revenue side, and it's about a $7 million balance that we expect to But aside from that, we can't really give you more revenue guidance, really, at this time.

Rexam: Contract terms for these trials, how that how that moves forward from that activity right because.

Rexam: To be recognized as revenue it can't just be a deployment right has been delivered and accepted and that will really come down to each individual customer each individual contract.

Rexam: The times on truck by truck basis, clearly in that global deployment range, 20% to 40, there are revenue vehicles in there and I guess.

Rexam: The best thing I can point, you to a reader of the financial statements would be when you put in the queue to go dive into note three on revenue and you will see there we talked about.

Rexam: The transaction price associated with the remaining performance obligations on the revenue side.

Rexam: And it's about a $7 million balance that we expect to to recognize as revenue from March 31 over the next 12 months, but aside from that we can't really get more revenue guidance.

Rexam: At this time.

Stephen Paul Weiland: Now I understand that. That's a good perspective to help us do our own math. And then secondly, given the context and given everything you laid out with how intricate these trials are and the contracts, et cetera, I'm still struggling to understand how, you know, competitive brands are rolling out or claiming to roll out, like, really large numbers with fleet over a relatively short period. Are they at what seems like economically disadvantaged levels versus what you guys are targeting?

Speaker Change: No I understand that that's a good perspective as to what our own math.

Speaker Change: And then secondly, given the context and given everything you laid out with how intricate. These trials are in the contracts et cetera.

Speaker Change: I'm still struggling to understand how.

Competitive brands are rolling out or claiming to rollout like really large scale numbers with fleet over a relatively soon period.

Speaker Change: Is there at.

Speaker Change: But it seems like economically disadvantaged levels versus what you guys are targeting.

Stephen Paul Weiland: Like, is this a good thing for the industry, a bad thing for the industry, something that we have to see how it plays out? I mean, I know it's not a company you're running, but you must be watching it closely.

Speaker Change: Is this a good thing for the industry a bad thing for the industry something we have to see how it plays out I mean, I noticed you get inside a company running but you must be watching those carefully.

Parker Stewart Meeks: No, certainly. I mean, we keep close tabs on what's happening in the market. You know, many of the same customers are competing with us with others, and we're excited about, you know, any opportunity, because we believe our technology and our business model, to your point, others are driving volumes of fuel cell vehicles at significantly negative cash contribution margins, where we're proud to have delivered trucks, and deployed trucks to large fleets last year in the US at a positive cash contribution margin back to Hyzon, which is due to our in-house And so, all I can say is that we applaud hydrogen demand because that is good for all of us.

Speaker Change: Yes, certainly I mean, we keep close tabs on what's happening in the market.

Speaker Change: Many of the same customers are competing with others.

Speaker Change: And we're excited about any opportunity because we believe our technology and our business model to your point others are driving volume of fuel cell vehicles at significantly negative cash contribution margins, where we're proud to have delivered trucks deployed trucks to large fleets last year in the U S. At a positive cash contribution.

Speaker Change: <unk> margin back to high zone, which is due to our in house technology due to our design choices.

Speaker Change: Driving that truck level cost structure to what we think is scalable foundation.

Speaker Change: So all I can say is.

Speaker Change: We applaud hydrogen demand that is good for all of us that puts dispensing points on the map that puts customers in play this market. When you look at the ambition of the state of California alone you are talking hundreds leading to thousands.

Parker Stewart Meeks: That puts dispensing points on the map. That puts customers in play. This market, when you look at the ambition of the state of California alone, you are talking hundreds, leading to thousands of heavy-duty fuel cell trucks in a relatively short period of time in the grand scheme of the truck market. So, there's plenty of room for growth, right?

Speaker Change: Heavy duty fuel cell trucks in a relatively short period of time in the Grand scheme of.

Speaker Change: The truck market.

Speaker Change: So there's plenty of market.

Speaker Change: And so we're not overly concerned about.

Parker Stewart Meeks: And so, we're not overly concerned about others that are driving fuel cell truck demand in parallel to us. We actually think it benefits the market in a lot of ways, because again, we're confident that as the only competitor that we see outside of China with a 200 kilowatt plus single stack, single fuel cell system in trucks with our cost structure and with the performance of our trucks, and then you come to the refuse vehicle, where from what we see, there's no other fuel cell refuse truck coming to North America for at least a couple of years from And it may be longer than that. And a use case where, from what we've seen from our data and from the way our customers use it for electric refuse trucks, the performance gap is substantial. Right?

Speaker Change: Others that are driving fuel cell truck demand apparel to us we actually think it benefits the market in a lot of ways because again, we're confident that as the only competitor.

Speaker Change: We see outside of China, with a 200 kilowatt plus single stack single fuel cell system in trucks with our cost structure and with the performance of our trucks and then it comes to the refuse vehicle.

Speaker Change: There from what we see there is no other fuel cell refuse truck coming to North America for at least a couple of years from what we've seen publicly.

Speaker Change: And it may be longer than that.

Speaker Change: Case, where from what we've seen from our data and from the our customers use it by electric refuse trucks. The performance gap is substantial.

Parker Stewart Meeks: So all that tells us that, you know, we're focused on a business model that makes sense. It's scalable, and it allows us the ability to manage cash burn and manage our balance sheet really smartly. Also fuel, right? Fuel, we all know this year has been quite challenging with the three heavy duty stations in California still shut down, where we're all using mobile fuelers in different cases to deliver fuel at prices that are higher than we would like.

Speaker Change: So all of that tells us that.

Speaker Change: We're focused on a business model that makes sense, it's scalable that allows us a a.

Speaker Change: Ability to manage cash burn to manage our balance sheet really smartly.

Speaker Change: So fuel fuel we all know this year is quite challenging with the three heavy duty stations in California still shut down where we're all using mobile <unk> and <unk>.

Speaker Change: If our cases to deliver fuel at prices that are higher than we would like so if your fuel.

Parker Stewart Meeks: So, you know, if you're fueling 150 trucks this year versus 150 trucks in 2026, there's gonna be a lot cheaper, and a lot less burden being carried by potentially the OEM to fuel those trucks. We believe every year we get out from 2024. So for us, it's about again, a scalable model for the ecosystem. That's what we're focused on. We think 10 large fleets, we can get to 1000 trucks a year over time, right, as they scale up over three or four years to the 100 truck a year goal that we have for each one of our large fleets that can, that have the ambition to do that. And we think this all lines up with production capacity and with fuel availability, and with, frankly, the economics of fuel and TCO, where this measured scaling approach is going to lead to the highest success outcome.

Speaker Change: 150 trucks this year for 150 trucks in 2026.

Speaker Change: It's going to be a lot cheaper.

Speaker Change: And a lot less burden being carried by potentially the OEM to fill those trucks, we believe ever.

Speaker Change: Every year, we get out from from 2024, so for US it's about again, a scalable model for the ecosystem is large fleet back to base. That's what we're focused on we think 10 large fleets, we can get to 1000 trucks a year over over time right as they scale up over three or four years to 100 trucks a year goal that we.

Speaker Change: For each one of our large fleets that can.

Speaker Change: That has the ambition to do that and we think this all lines up with production capacity and with fuel availability and with frankly, the economics of fuel and Tcl.

Speaker Change: Where this measured scaling approach is going to lead to the highest success alcohol.

Stephen Paul Weiland: Great. That's all super helpful. I appreciate all the commentary. Thank you.

Speaker Change: Great. That's all Super helpful. I appreciate all the commentary thank you.

Speaker Change: Thanks, Steve.

Robert Wertheimer: Your next question comes from the line of Rob Wertheimer with Malias Research. Please go ahead.

Speaker Change: Your next question comes from the line of Rob Wertheimer with Melius Research. Please go ahead.

Robert Wertheimer: Yeah, hi. Thanks for your continued comments on the refuse market, which is interesting. It's a market I just didn't guess would be a core one for hydrogen, and it's obvious the battery is struggling. A specific question there, and then to extend it to your other opportunities: have you seen companies try to pack more batteries in to kind of extend the duty cycle and do what they can do? Are there weight limits your refuse customers are sensitive to?

Robert Wertheimer: Yes, hi.

Robert Wertheimer: Thanks for your continued comments on the Russian market, which is interesting. It's a market just didn't guests would be.

Robert Wertheimer: Our core one for hydrogen.

Robert Wertheimer: Obviously battery is struggling.

Robert Wertheimer: Specific question there and then were extended to your other opportunities have you seen companies try to pack more batteries in two.

Robert Wertheimer: To kind of extend the duty cycle and do what you can do or is there a weight limit. Your reference customers are essential to have any sense of whether that's a temporary roadblock on electric or whether you.

Parker Stewart Meeks: I mean, any sense of whether that's a temporary roadblock on electric or whether you see any more fundamental limitations? And then, just to extend that, so that's an obvious kind of attractive market for you guys. Are there similar needs that you see in other niches that just haven't been met or can't be met easily by competitive products and other parts of trucking? Thank you.

Robert Wertheimer: See any more fundamental limitations and then just to extend that so that's a that's an obvious kind of.

Robert Wertheimer: Types of marketing you guys are there similar needs that you see in other niches that just haven't been matter can't be met easily by competitive products.

Robert Wertheimer: In other parts of trucking. Thank you.

Parker Stewart Meeks: Absolutely. Thanks much, Rob.

Speaker Change: Absolutely. Thanks, Thanks, so much Rob great questions and we.

Speaker Change: We are getting deeper and our refuse and we expect that honestly given how fast it is moving in the performance gap that we've seen so I'll take the first question on <unk>.

Parker Stewart Meeks: Great questions, and we are getting deeper into refuse than we expected, honestly, given how fast it is moving and the performance gap that we've seen. So, I'll take the first question on, just to restate it, you know, what do we see as the real, you know, temporary versus permanent barrier between battery truck performance, and can they resolve it with additional battery capacity? The short answer, Rob, today, what we see, at least from both our own view of the public data and our customers, which, you know, are on our schedule, are some of the largest refuse fleets in North America, along with, obviously, Ramondis, who ran their successful trial converted to a sale in Australia. You know, we see battery trucks that are struggling. The primary reason is that we are actually already waiting.

Speaker Change: Just just just restated what do we see as the real temporary versus permanent barrier between battery performance and cannot resolve it with additional battery capacity. The short answer dropped today, what we see at least from both our own view of the public data and our customers.

Speaker Change: Our in our schedule or are some of the largest refuse fleets in North America, along with obviously remind us he ran their successful trial converts to a sale in Australia.

Speaker Change: We see battery trucks that are struggling.

Speaker Change: The reason is actually already waves.

Parker Stewart Meeks: So your typical garbage truck, depending on the configuration, could hold somewhere up to 13 tons of trash. Some of these battery trucks are already loading up battery capacity so much that the weight limit, the weight penalty is up to four tons, so they're only carrying nine tons of trash. That causes a significantly higher number of trips, basically, to haul the same amount of trash to the landfill or whatever point they're going to.

Speaker Change: So your typical garbage truck, depending on the configuration control somewhere up to 13 tons of trash.

Speaker Change: Some of these battery trucks are already loading a battery capacity so much that the weight limit the weight penalty is up to four tons. So the only carrying nine tons of trash.

Speaker Change: That causes a significantly higher number of trips basically to hold the same amount of trash so going forward whatever point theyre going to that's a big reason why that combined with hill climb why they're only seeing in some cases have a day's work for their done so adding more battery is only going to exacerbate the weight problem, it's not really going to solve it.

Parker Stewart Meeks: That's a big reason why, combined with hill climb, you know, why they're only seeing, in some cases, half a day's work before they're done. So adding more battery is only going to exacerbate the weight problem. It's not really going to solve it.

Speaker Change: <unk>.

Parker Stewart Meeks: You know, I'm not, you know, a deep battery designer, but I would assume solid state or something has to break through to really change the dynamic of source capacity versus weight. So we see that as a structural issue with battery garbage trucks. Now there are some that we know are coming out with more efficient electric bodies and things like that. That certainly will help. But I would also put forward that any improvements they make to the battery truck and the body, we will outcompete with hydrogen attached to that.

Speaker Change: I'm not a deep battery.

Speaker Change: It.

Speaker Change: Designer, but I would assume solid state or something has to break through to really change the dynamic of storage capacity versus versus wait.

Speaker Change: So we see it as a structural issue with regard restructured now there are some that we know are coming out with more efficient electric bodies and things like that that certainly will help.

Speaker Change: But I would also put forward that.

Speaker Change: The improvements they made to the battery truck in the body, we will compete with hydrogen attached to that right. So the hydrogen fuel cell attached to a battery attached to an electric body will continue to out compete.

Parker Stewart Meeks: Right, so the hydrogen fuel cell attached to a battery attached to an electric body will continue to outcompete an all-battery garbage truck, mainly because of weight. The other thing I'll say, which is interesting on the same point, is that Refuge is now expanding to Class VIII.

Speaker Change: All battery garbage truck, mainly because of.

Speaker Change: Wait the other thing I'll say, which is interesting on the same point refuse is now expanding to class eight so.

Parker Stewart Meeks: So the same large fleet that runs a lot of refuse collection vehicles runs a lot of Class 8 vehicles to transfer 82,000 pounds of refuse from a transfer station to another location. Some of our customers in California are testing these Class 8 battery trucks to do 200, 220-mile-a-day, and the battery trucks can't do it. Because anywhere you go in Southern California, you're simply climbing hills, and you combine that weight penalty, that weight concern with the battery capacity on Class VIII, and the range just can't do the work.

Speaker Change: The same large fleets that run a lot of breakfast collection vehicles run a lot of class eight vehicles to transfer a 2000 pounds of refuse from AR.

Speaker Change: Per station to another another location.

Some of our customers in California are testing. These class eight battery trucks to do 200, 220 miles a day and the battery trucks can't do it.

Speaker Change: Because any way youre going in southern California, you are typically climbing hills and you combine that weight penalty that weight concern with battery capacity on class eights and the range just cant do the work. So if you look at our our class eight trials scheduled for the 200 kilowatt or the same large fleets that you would think of as refuse collection vehicle customers are in the class eight 200 kilowatt.

Parker Stewart Meeks: So if you look at our Class VIII trial schedule for the 200 kilowatt, a lot of the same large fleets that you would think of as refuse collection vehicle customers are in the Class VIII 200 kilowatt trial schedule because they're struggling with battery Class VIII. And this is all very exciting because it's one of the easiest, best use cases long term to fuel. All these trucks come back to the same location.

Speaker Change: Trial schedule.

Speaker Change: Because they are struggling with battery class eight and this is all very exciting because it's one of the easiest best use cases long term to fuel all these trucks come back at the same location theyre used to handling onsite fueling from gas right. A lot of these fleets run CMG today and a lot of the customers in the end argues pallets cities counties.

Parker Stewart Meeks: They're used to handling on-site fueling from gases, right? A lot of these fleets run CNG today. And a lot of the customers in the end are municipalities, cities, counties who have their own ambitions for zero emission trucks, particularly in California. And it's now becoming a criterion for RFPs for some of these large waste fleets to be able to win contracts. So in that situation, you're not even comparing to the combustion alternative; you're comparing to battery electric, where obviously, if you're having to buy 20, 30% more trucks to do the same work, really easy for us to beat that on a total cost of ownership standpoint before I get to the complications of putting 10 to 20 megawatts of power at a refuge site to try and charge a battery truck.

Speaker Change: Who have their own ambitions for zero emission trucks, particularly in California, and it is now becoming a criteria for rfps for some of these large wastewater seats to be able to win contracts.

Speaker Change: So it would be in that situation, you're not even comparing to the combustion alternative youre comparing to battery electric where obviously, if youre, having to buy 20%, 30% more trucks to do the same work fairly easy for us to beat that.

Speaker Change: On a total cost of ownership standpoint, before I get to the complications of putting 10 to 20 megawatts power at a refuge site to try and charge.

Speaker Change: Battery trucks, so we see the structural we see it as a huge advantage for <unk> because we're the first refuse truck that's coming to market in North America, and we believe we'll be the only one on the market based on public announcements for multiple years at least and we don't see battery, having very much of a shock to catch up.

Parker Stewart Meeks: So we see the structural advantage for Hyzon because we're the first refuse truck that's coming to market in North America and we believe will be the only one on the market based on public announcements for multiple years, at least. And we don't see battery having really much of a shot to catch up. And it's a use case that is now opening up to both of our major platforms, the refuse truck and the Class A truck.

Parker Stewart Meeks: On the other niches, it's a similar theme of where do you have a lot of power used sitting still? As part of why the refuse truck market is even more punishing for battery trucks is that some of the newer bodies, they're driving and they're packing at the same time. They're packing, they're sitting still.

Its use cases now is opening up to both of our major platforms. The refuse truck in the <unk>.

Speaker Change: Once a truck on the other niches. It's a similar theme of where do you have a lot of power used sitting still.

Speaker Change: As part of why the refuse truck market is even more penalizing and better choices. They also some of the newer bodies. They are driving and they're packing at the same time the packaging. They are sitting still they are using a lot of energy without moving where the region breaks can really help them all that much and so theres other applications, which are probably more of a class six class seven vehicle.

Parker Stewart Meeks: They're using a lot of energy without moving, where the regen brakes can't really help them all that much. And so there are other applications, which are probably more of a Class 6, Class 7 vehicle in gas, power, and water utilities, for instance. Think about your boom trucks, your lift trucks, any EPTO, any power take-off application. A lot of those, both DOT, Department of Transportation fleets and utility fleets, up to 40 percent of the energy they use is sitting still. Right?

Speaker Change: In.

Speaker Change: Gas power and water utilities for instance think about your boom trucks lift trucks any <unk> any power takeoff application.

What are those both Dod department transportation fleets and utility fleets up to 40% of the energy. They use is sitting still.

Parker Stewart Meeks: So that's tough for batteries typically to deal with, along with some of the axle limitations. So that's certainly a future market we see when we're ready, once the Class 8 refuse trucks are commercialized, to bring in a Class 6, Class 7 base power chassis, that you can pick your back end, right? Be that again, a lift or a boom or potentially a concrete back end or something else.

Speaker Change: Alright, so thats tough for battery typically to deal with.

Speaker Change: Along with some of the some of the actual limitation. So that's certainly a future market, we see when we're ready once the class eight refuse trucks or commercialize to bring in the class six seven based powered chassis that you can pick your backend right be that a again, a lift or a boom or potentially a concrete backend or something.

Speaker Change: Yes.

Robert Wertheimer: Okay, that's super interesting, thank you. And a little bit of a non-related question, your thoughts on testing and what you know now, what you will know about durability on the 200 stack, and then where does durability come in on your list of customer concerns? You know, obviously, there's a developing industry, so I don't know if that's number one or number 10, you know, on how people evaluate you. I'll stop there. Yeah, no, that's certainly a...

Speaker Change: Okay. That's super interesting, thank you and a little bit of a non related question.

Speaker Change: Your thoughts on testing and what you know now you will know on durability.

Speaker Change: On the 200 stack and then Windows durability comment on your list of customer concerns obviously, there's a developing industry. So I don't know.

Speaker Change: If that's number one and number 10 on how people evaluate your cost up there.

Parker Stewart Meeks: Yeah, no, no, certainly. And this is a question that I know our customers would say is very top of mind for them and for us as well. So, to answer your second question first, durability is on the short list, right? Because it's not just a question of – first, it's a question of uptime, right?

Speaker Change: Yes, certainly and this is the question that our customers would say is very top of mind for them and the process as well so to answer. Your second question first durability is a is on the shortlist right because it's not just a question on first a question on uptime Alright. That's the number one question is okay I'm going to trial. This truck in the trial it for anywhere typically from two.

Parker Stewart Meeks: That's the number one question is, okay, I'm going to trial this truck. I'm going to trial it for anywhere typically from two to four weeks. That's great. That proves to me that it works. It does the work. It can fit in my use case.

Speaker Change: To four weeks that's great.

Parker Stewart Meeks: But I can't have it out there for three months and have it down for a significant period of time, right? I've got to have some level of reliability. Knowing that it's a new technology and our early customers certainly understand that. But first, it's early in life durability, and then it certainly is late in life durability for total cost.

Speaker Change: It proves to me that it works it does the work it can fit in my use case, but I can't have it out there for three months ended down for a significant period of time right I've got to have some level of reliability, knowing that it's a new technology in our early customers. So they understand that but first it's early in life durability and then it certainly is late in life durability for telecom.

Speaker Change: Ownership right and so when you think about durability, a diesel truck you're talking depending on the use case.

Parker Stewart Meeks: And so when you think about durability, a diesel truck, you're talking, depending on the use case, seven to ten year useful life, 700, 800,000 mile useful life, but there's typically an engine overhaul somewhere in that life. You know, what's the equivalent for fuel cells? To reach 800,000 mile useful life, that's about 20,000 hours of fuel cell runtime durability, right? That is the end goal for us.

Speaker Change: Seven to 10 year useful life 700, 800000 mile useful life, there's typically an engine overhaul somewhere in that in that life, what's the equivalent for fuel cell reach 800000.

Speaker Change: While useful life, that's about that's about 20000 hours of fuel cell run time durability that is the end goal for us.

Speaker Change: We will not have that proven in sop just to be clear takes a long time to Peru 20000 hour durability on the same system just factually the.

Parker Stewart Meeks: You know, we will not have that proven at SOP. Just to be clear, it takes a long time to prove 20,000 hour durability on the same system, just factually. The first step goal is 15,000 hour durability, which would be about 600,000 miles on a 40 mile per hour average truck. Speed Use Case

Speaker Change: First step goal of 15000 hour durability, which would be about 600000 miles and on a 40 mile per hour average truck speed.

Parker Stewart Meeks: And the goal at SOP is to progress through accelerated simulation testing to that initial goal and to be on track basically to prove both 15,000 and 20,000 hours. Now, our benefit is our same technology; the same base IP going back to the MEA has been in development for 20 years. We do have some good data, obviously, from the 110 kilowatt and prior generations. However, to be clear, and we're clear with our customers, we are starting over, reproving durability on the 200 kilowatt, right?

Speaker Change: Speed use case.

Speaker Change: And the goal is to have progress through accelerated accelerate simulation testing through that initial goal and to be on track basically approved by <unk> 15000, 20000 hours now are benefited our same technology. The same base IP going back to the EMEA has been in development for 20 years, we do have some good data obviously.

Speaker Change: From the 110 kilowatt in prior generations, however to be clear and clear with our customers. We are starting over re proving durability on the on the 200 kilowatt right because it is certainly on the shoulders of all of that prior proof point.

Parker Stewart Meeks: Because it is certainly on the shoulders of all that prior proof, but it's something that is cutting edge and, as such, needs to be proven again. So, to put it simply, it's critical to us, it's critical to our customers, and it's lifetime durability, both short-term and long-term. We're quite confident, I think you heard me describe in detail our SOP process. We're quite confident that the rigor is going into durability testing, both in our own lab at multiple levels and in outsourced labs across the US and in the world. And we are on track to prove the durability that we need to prove, and we'll continue to do that in open communication with our fleet customers.

Speaker Change: But it's something that is is cutting edge and as such needs to be proven again so.

Speaker Change: To put it simply it's critical to US is critical to our customers. It's a lifetime durability, both short term and long term, we're quite confident that you heard me describe in detail. Our sop process, we're quite confident that the rigor is going in to durability testing both in our own lab at multiple levels and an outsourced labs across the U S.

Speaker Change: And in the World and we are on track to prove the durability that we need to prove and we will continue to do that.

Speaker Change: The open communication with our fleet customers.

Speaker Change: Thank you.

Operator: That concludes our question and answer session. I will now turn it back to Parker Meeks for closing remarks.

Parker Stewart Meeks: Thanks, Rob conclude that concludes our question and answer session I will now turn it back to Parker mix for closing remarks.

Parker Stewart Meeks: Thank you very much, operator. And thank you all for joining us. Our work so far in 2024 really sets us up well to achieve the milestones we described, and we look forward to continuing to update you as we drive toward our commercialization goals this year. Thank you again for joining us today.

Parker: Thank you very much operator, and thank you all for joining us our work so far in 2024 really sets us up well to achieve the milestones. We described and we look forward to continuing to update you as we drive toward our commercialization goals this year.

Speaker Change: You again for joining us today take care.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Operator: and many more. Thank you for watching. I'm your host, Sarah Palin.

Speaker Change: [music].