Hyliion Holdings: Still Early Innings For The Company's KARNO Generator Technology - Hold

seekingalpha09-13

Hyliion has shifted focus from electric powertrains to its fuel-agnostic KARNO power generator solution, a technology acquired from a division of GE two years ago.With management having shifted the ...

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Hold\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-13 19:13 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4720924-hyliion-holdings-early-innings-for-karno-generator-technology-hold><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Hyliion has shifted focus from electric powertrains to its fuel-agnostic KARNO power generator solution, a technology acquired from a division of GE two years ago.With management having shifted the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4720924-hyliion-holdings-early-innings-for-karno-generator-technology-hold\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1093756325.SGD","symbol_name":"FTIF - Franklin K2 Alt Strat Fd A (acc) SGD-H1","start_time":0,"source_url":"https://seekingalpha.com/article/4720924-hyliion-holdings-early-innings-for-karno-generator-technology-hold","article_id":"2467725931","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1301112929/image_1301112929.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2467725931","pubTimestamp":1726225987,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Hyliion has shifted focus from electric powertrains to its fuel-agnostic KARNO power generator solution, a technology acquired from a division of GE two years ago.With management having shifted the na","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1093756325.SGD":"FTIF - 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(NYSE:HYLN) previously, so investors should view this as an update to my earlier coverage of the company. Twelve months ago, Hyliion Holdings Corp., or \"Hyliion\", surprised market participants with the decision to abandon its core electric powertrain business and basically start from scratch by refocusing on its fuel-agnostic KARNO power generator solution, a technology acquired from a division of GE Aerospace (GE) or \"GE\" two years ago: Company Presentation The company is marketing the KARNO solution for a broad range of applications including EV charging and data centers, with early field deployments expected later this year. Company Presentation Similar to much larger competitor Bloom Energy (BE), Hyliion's management has been emphasizing the company's data center opportunity on the most recent conference call:  Based on customer feedback, we've made a couple of updates to our target markets infographic that we shared a few months ago. The first is with regard to data centers. As we've met with numerous companies in this space, it has become apparent that this market can become a key focus vertical for us. We've heard strong feedback that the AI boom is demanding significantly more data centers, which, in return, requires significantly more power. KARNO generators with their expected fuel flexibility, high efficiency and modularity can enable data center operators to generate their own power using pipeline natural gas or other low carbon fuels and then seamlessly switch to on-site fuel storage, such as diesel or propane in case of emergency or pipeline failure. Such flexibility will enable these customers to use the KARNO generators for meeting both baseload generation and resiliency needs at a facility.  Last month, Hyliion signed a letter of intent with next-generation data center technology start-up Flexnode \"to deploy up to 10 KARNO generators to power high-performance flexible micro data centers\". Unfortunately, development of the KARNO generator hasn't gone according to management's original expectations, with final milestones now expected to be met \"by the end of the year\" rather than in H1/2024 as originally planned: Company Presentation Last month, Hyliion reported Q2/2024 results highlighted by substantially reduced cash burn: Regulatory Filings The company finished the quarter with $248.7 million in cash and liquid investments. Hyliion continues to have no debt. During Q2, the company bought back an additional 1.9 million shares under its $20 million repurchase program. In aggregate, Hyliion has utilized approximately $14 million in cash to buy back 10.6 million shares in H1/2024. However, due to the increase in the company's stock price, Hyliion decided to suspend repurchases in early May and does not expect to resume buybacks anytime soon. Looking forward, the company now projects 2024 KARNO technology cash usage of $55 million, higher than the previous $40 to $50 million range as a result of additional investments in 3D printers. In 2025, Hyliion expects KARNO-related cash burn to increase slightly, with revenues \"in the low double-digit millions of dollars\". Gross margins are expected to approach cash break-even by late 2025 or early 2026: Company Presentation At the projected rate of cash usage, Hyliion still has more than three years to successfully commercialize its KARNO generator technology. However, the KARNO generator is likely to face stiff competition from both conventional and fuel cell-powered solutions and, as a new technology, will likely require extensive testing before prospective customers would consider large-scale purchases. Based on the company's projected year-end cash balance, KARNO's enterprise value is currently above $100 million as compared to negative $55 million at the beginning of the year. For my part, I am still struggling with the idea that tiny Hyliion could be successful in commercializing a technology that GE decided to unload for some spare change a couple of years ago. However, with several years of liquidity runway, I am reiterating my \"Hold\" rating on the company's shares for now. Bottom Line With management having shifted the narrative to the company's alleged AI data center opportunity, Hyliion's shares have attracted another batch of speculative investors in recent months. However, the company's fuel-agnostic KARNO generator remains in beta development as of today, with revenues expected to ramp up slowly over the course of 2025 and cash burn not likely to reverse anytime soon. Given ample competition from both conventional and fuel cell-powered solutions, successful commercialization won't be an easy task.  But with liquidity sufficient to carry the company well into 2028, I am reiterating my \"Hold\" rating on Hyliion's shares.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2467725931"}