Hyzon Motors Inc. (NASDAQ:), a leader in the heavy mobility fuel cell sector, recently held its second quarter 2024 earnings call, announcing a strategic shift towards the North American market, particularly focusing on Class 8 and refuse vehicle segments. The company reported positive feedback from the launch of its 200 kilowatt fuel cell truck trial and plans for further commercial agreements.
Despite a revenue of $0.3 million, Hyzon remains optimistic about its long-term prospects, highlighting advancements in fuel cell technology and commercial interest in stationary power applications. The company also emphasized the advantages of fuel cell trucks over battery electric alternatives in terms of performance and economic benefits.
Key takeaways from the earnings call include Hyzon Motors shifting its focus to the North American market, halting operations in the Netherlands and Australia, raising $4.5 million to extend financial runway, and plans to achieve SOP for its fuel cell system and Class 8 truck platform in H2 2024. The company also reported a decrease in both R&D and SG&A expenses, with cash, cash equivalents, and short-term investments totaling $55.1 million as of June 30, 2024.
The company’s outlook remains positive, aiming to secure additional capital, exploring strategic alternatives, signing new large fleet commercial agreements, and decreasing average monthly net cash burn to about $6.5 million by year-end. Despite some bearish highlights, such as low revenue and ongoing financial pressure, Hyzon’s bullish highlights, including positive feedback from trials and increased commercial interest, indicate a promising future.
InvestingPro insights provide further analysis of Hyzon’s market position and potential, with key financial metrics and analyst insights available. The company’s strong cash position relative to its debt and substantial revenue growth suggest that its strategic efforts are gaining traction in the competitive heavy mobility market. Investors are encouraged to consider these factors when evaluating Hyzon’s future prospects. First, let me address the announcement we made last month regarding our decision to focus on our core North American Class 8 and refuse vehicle markets. After a thorough review of our strategic options, we determined that concentrating our efforts on the market with the highest immediate commercial potential in North America was the best course of action. As a result, we have decided to cease operations in the Netherlands and Australia. This decision, made in collaboration with our Board of Directors, will allow us to allocate our financial resources and investments towards our single stack, 200 kilowatt fuel cell technology for North American Class 8 and refuse truck platforms.
In terms of financials, we are proud to have met our guidance for this quarter and have reduced our average recurring monthly cash burn to approximately $6.5 million by year end after halting operations in international markets. Moving forward, we are no longer providing deployment guidance for the rest of 2024 as we focus on opportunities in the North American market. We are also continuing our capital raise efforts to support the commercialization of our 200 kilowatt fuel cell technology, having raised $4.5 million in gross proceeds through a registered direct offering in late July.
In terms of commercial progress, we have delivered additional fuel cell trucks to customers such as Performance Food Group and have launched a large fleet customer trial program for our 200 kilowatt Class 8 fuel cell trucks. The initial operational performance and telematics data from these trials have been promising, with our trucks demonstrating superior fuel efficiency compared to traditional diesel trucks. We are also seeing commercial interest in our fuel cell electric refuse trucks, with trials set to launch with customers such as recology. Overall, we are making important strides in driving both near-term and long-term value for our company. We continue to be in high demand for our trial program across our two vehicle platforms, with 25 large fleets scheduled to participate through January 2025. These fleets are among the largest in the North American Class 8 and refuse truck markets, averaging over 4,200 trucks per fleet, with 10 fleets having at least 5,000 trucks each. We prioritize large fleets due to their strong motivation to purchase zero-emission vehicles, driven by government incentives, customer requirements, and sustainability commitments. If successful, we expect to finalize commercial agreements in the second half of 2024, with deliveries starting in 2025.
Furthermore, we are seeing increased interest in our fuel cell technology from the stationary power market, particularly in applications like backup and primary power for data centers. The growing demand for clean hydrogen fuel cell power in data center expansion projects presents a significant opportunity for us in the stationary fuel cell power market estimated to reach $3.5 billion in the U.S. by 2030.
In terms of our fuel cell technology development, we are on track for SOP in the second half of 2024, with our fuel cell system offering a more cost-effective and fuel-efficient option compared to conventional approaches. We have made progress with our C sample development and are expanding our testing capabilities to ensure quality control once we begin production. Our remaining CapEx spend is nearly complete, and we expect to achieve an annual capacity of 700 kilowatt, 200 kilowatt fuel cell systems.
Despite potential changes in the political landscape, we remain optimistic about the future of our industry and company, thanks to the strong support we see from U.S. government programs. Our primary goals for 2024 include reaching SOP for our fuel cell system and Class 8 fuel cell truck platform, as well as signing new large fleet commercial agreements based on successful trials. We are also focused on strengthening our balance sheet and securing additional capital to support our business. Now, I’ll turn it over to Steve to discuss our financial results in more detail. In summary, we have made significant strategic repositioning decisions focusing on the North American Class 8 and refuse markets. Despite incurring charges of approximately $21 million due to exit activities in Europe and Australia, we anticipate a reduction in monthly net cash burn to approximately $6.5 million by the end of the year. Our second quarter 2024 revenue was $0.3 million, with cost of revenue primarily related to restructuring actions. R&D, SG&A, and net cash burn all came in at or below the low end of guidance ranges. We have recently completed our first capital raise since becoming shelf eligible, which we believe will enhance trading liquidity and potential capital raises. As we continue to focus on our core initiatives, we are optimistic about the future based on positive feedback from trial customers and the performance of our fuel cell trucks. Thank you. We are thrilled to announce that we will be starting trials of the U.S. refuge truck this summer and are making progress with the 25 large fleets currently in our full trial schedule. Our goal is to convert multi-year commercial agreements based on the success of these trials. If successful, this will provide a strong pipeline and commercial growth foundation for Hyzon as we head into 2025 and beyond. We are on track for the start of production of our single stack 200 kilowatt fuel cell system in the second half of this year, while also enhancing our manufacturing efficiencies and expanding our facility capabilities in Brook Illinois. We want to express our gratitude to the entire Hyzon team for their unwavering dedication. Additionally, we extend our thanks to our customers and stakeholders for their continued partnership in our mission to reduce emissions in the heavy-duty industry through hydrogen fuel cell technology. With that, we are now ready for any questions. So, especially in California, customers at the city and county levels are now requiring large refuse management companies to include a goal and scoring mechanism in their RFPs and bid packages. This goal involves having a certain number of zero-emission trucks in their fleet by a specified year, such as 2026 or 2027. This requirement is driving competition among collection fleets to either retain existing contracts or expand into new ones. While battery-based technology is an option for meeting this requirement, it may require purchasing 25% to 40% more trucks compared to fuel cell technology.
Fuel cell technology is showing significant advantages over battery-based technology in terms of performance and economics. Trials have demonstrated up to 3 times better fuel efficiency with fuel cell trucks compared to diesel, which could result in cost savings with hydrogen pricing at $15 per kilogram. This is generating high demand from large refuse fleets in both the U.S. and Canada, given the performance equivalency with combustion engines and the economic advantages of fuel cell technology.
In terms of infrastructure, Hyzon has been working on establishing hydrogen refueling infrastructure to support its fuel cell trucks. This infrastructure is crucial for the success of zero-emission truck adoption. While both battery electric and fuel cell technologies face infrastructure challenges, the path for hydrogen infrastructure is seen as easier and less expensive. Many fleets already have experience handling fuel on-site, whether it’s diesel, CNG, or self-produced CNG, making the transition to hydrogen refueling more seamless. In contrast, the high power requirements for charging multiple battery electric trucks can present challenges in terms of grid capacity and costs. When looking at estimates for electric power charging, it’s important to consider the full cost of infrastructure, not just the cost of power. Many fleets are realizing the challenges of installing charging infrastructure for large numbers of trucks, which can take years to complete. Mobile fuelers provide a more flexible and efficient solution for fueling trucks, allowing for quick refueling times and longer range. This approach is being adopted by some fleets as a more practical alternative to battery electric options. The development of higher capacity fueling options and on-site dispensing facilities is a key focus for the future, with the goal of scaling up to fueling 50 to 100 trucks at a single site. This approach offers a different development structure and timing compared to traditional grid-dependent electric solutions. Collaborations with infrastructure partners are helping to lay out a clear path for fuel cell adoption in the market. The upcoming commercial production of the 200-kilowatt stack is seen as a significant milestone that could attract more customers to adopt fuel cell technology, especially among large Class 8 fleets that prioritize quality and longevity in their operations. The bar is set very high for us, and that is why we have been hands-on from the start, following a typical OEM automotive SOP process. We communicate with fleets in a way they are used to, ensuring transparency in our progress in SOP, quality control, durability testing, and design changes. We show them our learnings in fuel cell development, testing, and design, as well as in trials. Our fleets want to see these learnings, as they have been through transitions before, such as CNG, LNG, and battery electric trucks. Transparency and a standard industry process that they can trust are crucial. We have implemented over 40 design changes in the fuel cell since the start of the SOP, giving our customers confidence in our progress. We have introduced camera-based quality control, improved production efficiencies, and expanded our testing capabilities. We are confident that we will reach all milestones and deliver a commercially viable product. Our fleet customers want a reliable product that meets their decarbonization goals and performance expectations. We are on track to provide a product that does not require subsidies in the future and can scale with their zero-emission truck ambitions. This is what we offer to our customers. Based on the capacities previously mentioned, mobile or temporary fueling solutions can continue to support PFG’s needs well into the second tranche. With a total of 20 trucks in the second tranche, and potentially 50 trucks in the future, a liquid fueling trailer solution could be utilized. However, as the number of trucks increases, a permanent installed solution may become necessary. It is estimated that 30 to 40 trucks at a single facility could base load a permanent install station economically. As PFG transitions from mobile fueling, planning for an onsite permanent solution is underway with sufficient capacity to support the truck volume. The confidence level in executing 25 trials with large fleets in the near future is high, as the majority of the trials are in advanced stages and concentrated in specific geographic areas, facilitating support and fueling logistics. The performance of the Class 8 truck in trials has been promising, showcasing fuel efficiency and scalability. The upcoming trial of the refuse truck is also anticipated to demonstrate the technology’s capabilities. Overall, the trial program is expected to show the market that fuel cell technology is ready for heavy-duty truck applications. I will now pass the conference back to CEO, Parker Meeks for his closing remarks.
Parker Meeks: Thank you, operator, and thank you to all of our participants for joining us today. We are excited to keep you updated as we work towards achieving our commercialization goals this year. Take care.
Operator: That concludes today’s conference call. You may now disconnect.